JAKARTA: Malaysian palm oil futures reversed losses on Thursday amid lower trading volumes and worries over poor production expectations in the fourth quarter this year. The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange went up 33 ringgit, or 0.85%, to close at 3,919 ringgit ($903.93) a metric ton. “Rather thin volume today, suggesting a lethargy in selling activities.
The biggest worry is low arrival of fresh fruit bunches and poor production performance both in August and September,” said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
“Looking at the overall trend, there is huge possibility of no peak production in the fourth quarter this year. This dismal performance will likely keep prices well supported in the near term,” he added. Dalian’s most-active soyoil contract fell 0.88%, while its palm oil contract was down 0.53%. The Chicago Board of Trade gained 1.32%. Palm oil tracks price movements in related oils as they compete for a share in the global vegetable oils market.
Indonesia, the world’s biggest palm oil exporter, plans to lower export levy rates of the tropical oil to improve competitiveness against rival vegetable oils and raise farmers’ income. Malaysia’s palm oil inventories are expected to have climbed to their highest levels in six months at the end of August due to lacklustre export demand, a Reuters survey showed.
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