KUALA LUMPUR: Malaysian palm oil futures closed lower on Tuesday after a survey forecast higher stockpiles as production swelled to a five-month high, while a softer ringgit lent some support to the market.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange slid 61 ringgit, or 1.8%, to 3,320 ringgit ($720.96) a tonne, after two consecutive sessions of gains.
Malaysia’s palm oil inventories at the end of May are expected to reverse a three-month decline as production expanded to its highest so far this year amid flattish exports, a Reuters survey showed.
May stockpiles are seen rising 6.8% to 1.6 million tonnes month-on-month. Production in the world’s second-largest producer is expected to surge 21% to 1.45 million tonnes, according to the survey.
India’s palm oil imports sank to a 27-month low in May as buyers cancelled expensive cargoes of the edible oil and replaced them with cheaper soyoil and sunflower oil, six dealers told Reuters.
The ringgit, palm’s currency of trade, fell 0.66% against the dollar, making the commodity cheaper for holders of foreign currency.
Top producer Indonesia is expecting a severe dry season from the impact of the El Nino weather pattern, threatening harvests and raising the risks of forest fires, the head of its weather agency said.
The European Commission said on Monday it was extending until Sept. 15 an arrangement whereby five of Ukraine’s EU neighbours can restrict imports of Ukrainian grain, including sunflower seeds.
Dalian’s most-active soyoil contract rose 0.14%, while its palm oil contract lost 0.5%. Soyoil prices on the Chicago Board of Trade were down 0.1%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
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