SINGAPORE: Malaysian palm oil futures fell to a one-week trough on Wednesday, dragged down by softer rival oils and increased output from South Peninsular palm oil mills.
The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange slipped 35 ringgit, or 0.91%, to 3,831 ringgit ($823.16) per metric ton, extending losses for a second session.
Malaysia maintained its export tax for crude palm oil for September at 8% and increased its reference price, according to a Malaysian Palm Oil Board circular.
Production at Southern Peninsular Palm Oil Millers’ Association mills rose better than anticipated during Aug. 1-20, up 7% from a month earlier.
Dalian’s most-active soyoil contract dipped 0.1%, while its palm oil contract was down 0.7%. Soyoil prices on the Chicago Board of Trade lost 0.6%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
ProFarmer’s annual Midwest Crop Tour report released Monday evening indicated soybean crop growth was higher than the three-year average, with limited impact from current drought conditions, said Sandeep Singh, director of The Farm Trade, a Kuala Lumpur-based consulting and trading firm.
Expectations of higher supply pushed the prices of competing vegetable oils downward in early trade, but changing weather will keep the markets whipsaw in the current range, Singh added.
The Malaysian ringgit, palm’s currency of trade, softened 0.17% to 4.65 against the dollar. A weaker ringgit makes palm oil more attractive for foreign currency holders.
Palm oil may test a support of 3,778 ringgit per metric ton, a break below which could open the way towards 3,676 ringgit, said Reuters technical analyst Wang Tao.
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