Palm snaps 4-day win streak on profit taking, worries of lower demand from India

KUALA LUMPUR: Malaysian palm oil futures snapped a four-day winning streak on Thursday due to profit taking and concerns over falling demand from its top buyer India, although expectations of lower production limited losses.

The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange closed down 12 ringgit, or 0.47%, at 2,517 ringgit ($589.74) a tonne, after hitting its highest since Feb. 24 earlier in the day.

"The equities market is coming down and sales to India has been bad," a Kuala Lumpur-based trader said.

Coronavirus cases in India reached 968,876 as of Thursday morning, and more states and cities were forced to impose fresh lockdowns to contain its spread.

The pandemic has depressed domestic demand, with India reporting a trade surplus for the first time in more than 18 years for June.

Also weighing on the commodity, global equities fell due to deteriorating US-China relations.

Earlier in the day, palm reacted to expectations of lower Malaysia and Indonesian production in July, said Marcello Cultrera, institutional sales manager and broker at Phillip Futures in Kuala Lumpur.

Malaysia, the world's second-largest palm oil producer, on Thursday estimated its total palm oil export value this year at 65-70 billion ringgit ($15.24 billion-$16.41 billion), compared with 63.73 billion ringgit last year.

Soybean production in India, the world's biggest importer of palm oil, is set to jump by at least 15% in 2020 from a year earlier as farmers are increasing the oilseed's acreage.

Dalian's most-active soyoil contract rose 0.54%, while its palm oil contract gained 1.07%. Soyoil prices on the Chicago Board of Trade were up 0.17%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.