Palm oil slips to near 3-week low, logs second weekly loss

KUALA LUMPUR: Malaysian palm oil futures slipped to a near three-week low on Friday, logging a second straight week of loss, amid expectations of rising output and growing stockpiles.

The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange was down 23 ringgit, or 0.51%, at 4,483 ringgit ($1,102.29) a metric ton, its lowest since June 15. The contract fell 1.86% this week.

Market participants are expecting a rise in output that is expected to contribute to a surge in stocks, while weakness in Dalian palm olein futures also weighed, said Anilkumar Bagani, commodity research head at Sunvin Group.

Dalian’s most-active soyoil contract fell 0.43%, while its palm oil contract shed 1.43%. The Chicago Board of Trade is closed for a public holiday.

Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market.

A Reuters survey showed that Malaysia’s palm oil inventories likely rose in June to their highest level on record for the month, as stronger production outpaced demand growth.

However, anticipated export supply tightness from Indonesia due to its 50% biodiesel blending mandate and talks of a super El Nino this season are cushioning prices from a steeper decline, Bagani added.

Oil prices were steady and little changed for the week as traders held on to hopes that attempts to secure peace in the Middle East between the U.S. and Iran would succeed.

Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.

The ringgit, palm’s currency of trade, strengthened 0.25% against the dollar, making the commodity slightly more expensive for buyers holding foreign currencies.