JAKARTA: Malaysian palm oil futures posted a weekly drop on Friday, snapping three consecutive weeks of gains, hurt by weakness in rival vegetable oils and expectations of higher ending stock in August.
The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange lost 6 ringgit, or 0.16%, to end at 3,826 ringgit ($818.57) per metric ton, its lowest closing price in nearly four weeks.
The contract plunged for five straight sessions and lost 5.3% for the week.
“Market is under pressure on estimates of a steep rise in Malaysian palm oil August end inventories,” said Anilkumar Bagani, commodity research head at Mumbai-based Sunvin Group.
Stockpiles of Malaysia’s palm oil likely jumped to a six-month high to 1.89 million tons at the end of August as output rose and exports slowed, a Reuters survey showed.
The Malaysian Palm Oil Board (MPOB) is due to release its August supply-demand data on Sept. 11.
A supportive estimate of the September 1-5 Malaysian palm oil output and exports could not support the contract from the pressure of losses in rival oils, analysts said.
“Palm futures have been on heavy liquidation this week as trading dynamics were gripped by losses in related vegetable oils,” said Sathia Varqa, senior analyst at Fastmarkets Palm Oil Analytics.
Argentina’s soybean crop for 2023/24 is estimated at 50 million metric tons, the highest in the last five years, as the El Nino weather phenomenon is expected to bring rain to the area.
Dalian’s most-active soyoil contract dropped 1.34%, while its palm oil contract fell 1.15%. Soyoil prices on the Chicago Board of Trade were down 0.55%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Palm oil may drop further to 3,730 ringgit per metric ton, driven by a wave C, said Reuters technical analyst Wang Tao.
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