KUALA LUMPUR: Malaysian palm oil futures ended nearly 2% lower on Wednesday, snapping a four-day winning streak tracking weaker rival soyaoil, but losses were limited by expectations of a plunge in July inventories.
The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange settled down 51 ringgit, or 1.84%, to 2,717 ringgit ($648.45) a tonne.
Palm rose as much as 2.82% in the previous session, touching its highest since Feb. 10.
Managed funds are reducing their net long in soyabean and soyaoil on better soyabean crop quality in the US and a record-breaking crop in Brazil, said Marcello Cultrera, institutional sales manager and broker at Phillip Futures in Kuala Lumpur.
Brazilian soya production will hit a record 132.6 million tonnes next season, as demand from China remains strong and farmers intend to expand acreage, according to a forecast from agribusiness consultancy StoneX on Tuesday.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Dalian's most-active soyaoil contract fell 1.83%, while its palm oil contract was down 0.24%. Soyaoil prices on the Chicago Board of Trade were also trading 0.16% lower.
"Palm oil exports estimates for shipments from Malaysia over August 1-5 show around a 20% contraction month-on-month," Cultrera said.
A Reuters survey pegging Malaysia's end-July palm oil inventories nosediving 11.94% from June to three-year lows is supporting prices, as exports grew and production slumped due to a worsening labour shortage.
"We project crude palm oil prices to trade in the range of 2,400-2,800 ringgit per tonne in August," Ivy Ng, regional head of plantations research at CGS-CIMB Research, said in a note.
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