Palm oil tracks soyoil fall, wet weather stokes supply concerns

KUALA LUMPUR: Malaysian palm oil futures eased on Thursday as rival soyoil prices fell, but supply concerns limited losses as heavy rains hit top producers Indonesia and Malaysia.

Palm oil for October delivery on the Bursa Malaysia Derivatives Exchange fell 7 ringgit, or 0.26pc, to 2,649 ringgit ($623.59) a tonne by the midday break.

"The market seems stagnant after some profit-taking. Fresh news or data is needed to sway the market," said Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics.

The Council of Palm Oil Producing Countries (CPOPC) on Wednesday said the prospect of a La Nina weather pattern bringing wetter-than-normal weather to Indonesia and Malaysia could hit crop production.

CPOPC forecast Indonesia's crude palm oil production in 2020, would be 1-2 million tonnes below last year's 44 million tonnes, while output in Malaysia is expected to drop 4.3pc to 19 million tonnes.

The Malaysian Palm Oil Association forecast crude palm oil production during July 1-20 to have fallen 8.9pc from the month before, traders said on Wednesday.

Indonesian state oil company PT Pertamina is set to test the production of jet fuel made up of 3pc palm oil by the end of the year, Chief Executive Nicke Widyawati said on Thursday.

Dalian's most-active soyoil contract fell 0.74pc, while its palm oil contract dropped 0.11pc. Soyoil prices on the Chicago Board of Trade were down 0.72pc.

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

Palm oil may test a support at 2,624 ringgit per tonne, following its failure to break a resistance at 2,703 ringgit, Reuters technical analyst Wang Tao said.