Palm eases on weaker rival oils, rising inventories

KUALA LUMPUR: Malaysian palm oil futures eased on Thursday, pressured by weaker rival oils and rising stockpiles, although expectations of tight supplies limited losses.

The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange fell 20 ringgit, or 0.47%, to 4,271 ringgit ($1,011.85) a tonne by the midday break, after rising 3.6% in the previous session.

Malaysia's palm oil stockpile at the end of July likely expanded 1.6% to 1.64 million tonnes, its highest level in 10 months, a Reuters survey showed.

July output is seen shrinking 4% to 1.54 million tonnes, while exports are forecast to decline 4.2% to 1.36 million tonnes.

Palm oil to bounce more to 4,132 ringgit

This is a departure from the historical trend where July stocks have risen by an average of 2.9% over the past 10 years, while July production has climbed by 9% on average, Ivy Ng, regional head of plantations research at CGS-CIMB Research, said in a note.

Exports were hurt by high edible oil prices and concerns over weaker demand due to an increase in new COVID-19 infections in some countries, Ng added.

The Malaysian Palm Oil Board will release the official data on August 11.

Export shipments from Malaysia during Aug. 1-5 jumped 12.6% from the same period in July to 182,615 tonnes, cargo surveyor Intertek Testing Services said.

Dalian's most-active soyoil contract rose 2.2% and its palm oil contract gained 2.1%. Soyoil prices on the Chicago Board of Trade were down 0.8%.

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

Palm oil faces a resistance at 4,312 ringgit per tonne, it may hover below this level or retreat towards 4,197 ringgit, Reuters technical analyst Wang Tao said.