JAKARTA: Malaysian palm oil futures fell for a second day on Monday after top palm oil producer Indonesia said it was considering a larger export quota to reduce high domestic inventories and as weaker rival oils also weighed on prices.
The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange fell 3.25% to 4,555 ringgit ($1,032.65) per tonne by midday break, after Friday’s 4% decline.
Indonesia proposed raising palm oil export quotas and is considering increasing mandatory levels of biodiesel in fuel mixes to prop prices for farmers at a time when domestic palm oil inventories are high, a senior minister said on Saturday.
The proposal, combined with “spillover weakness” from rival oil prices on the Dalian market, is weighing on palm oil, a trader based in Kuala Lumpur said.
Palm oil may stabilize around 4,588 ringgit
Dalian’s most-active soyoil contract fell 2.03%, while its palm oil contract slipped 2.31%. Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Some market participants are also concerned about a palm oil stock rebuild in Malaysia amid expectation of higher production and sluggish export data, the trader added.
Exports of Malaysian palm oil products for June fell 7.4% on monthly basis to 1.23 tonnes, cargo surveyor Societe Generale de Surveillance said on Friday.
Palm oil may stabilize around a support at 4,588 ringgit per tonne, and test a resistance at 4,742 ringgit thereafter, Reuters technical analyst Wang Tao said.
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