KUALA LUMPUR: Malaysian palm oil futures extended losses on Friday, weighed down by weaker rival Dalian oils and concerns over Indonesia’s new export system, though they still managed to log a third straight weekly gain.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange slid 47 ringgit, or 1.02percent, to 4,554 ringgit (USD1,131.43) a metric ton at the close. The contract rose 0.42percent this week.
The market traded lower due to a selloff in Chinese vegetable oil futures, with weakness further intensified by the prospect of aggressive Indonesian cash market palm oil selling ahead of the new export system coming into full operation, said Anilkumar Bagani, commodity research head at Mumbai-based brokerage Sunvin Group. Indonesia issued a much-anticipated regulation on Friday to bring exports of its strategic commodities, including palm oil, under central government control, a move aimed at boosting state earnings and stabilising its currency. The transition period for the policy started on June 1, with its full implementation planned at the start of next year.
However, the market is being further cushioned by expectations of lower production for May, Paramalingam Supramaniam, director at brokerage Pelindung Bestari, added.
Dalian’s most-active soyoil contract fell 1.32percent, while its palm oil contract shed 3.29 percent. Soyoil prices on the Chicago Board of Trade were up 0.09percent.
Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market. The ringgit, palm’s currency of trade, weakened 0.37percent against the dollar, making the commodity cheaper for buyers holding foreign currencies. Oil prices edged lower after Oman said operations at the Mina al Fahal port were proceeding normally, following a Reuters report that oil loadings had been suspended after an explosion.
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
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