SINGAPORE: Malaysian palm oil futures eased on Friday tracking losses in rival edible oils, although the contract was set for a third weekly rise on forecasts of lower output amid good January exports.
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange fell 5 ringgit, or 0.13%, to 3,989 ringgit ($844.23) a metric ton at midday, snapping a two-day climb. For the week, palm has risen 1.27% so far as heavy rains in Malaysia, the world’s second-largest producer, fuelled expectations for January production to plunge.
“Due to the lower production season, palm oil is likely to stay at a tighter spread or even at a premium over competing soy oil and sun oil, at least till the end of Q1 2024,” said Anilkumar Bagani, Research head of Mumbai-based vegetable oils broker Sunvin Group said.
Exports from Malaysia during Jan. 1-25 rose 0.64% to 1,064,778 tons from 1,057,955 tons shipped during the previous month, cargo surveyor Intertek Testing Services said on Thursday.
Vegetable oil demand from China, the world’s second-largest palm oil importer, could pick up after the Spring Festival in February as its palm inventories have gone down, Bagani said.
Dalian’s most-active soyoil contract fell 0.6%, while its palm oil contract was up 0.53%. Soyoil prices on the Chicago Board of Trade firmed after a 2.8% overnight decline.
Oil prices eased on Friday after rising to their highest since December in the previous session. However, they were set for their biggest weekly gain since October as positive US economic growth and signs of Chinese stimulus boosted fuel demand sentiment.
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock. The Malaysian ringgit, palm’s currency of trade, strengthened 0.11% against the dollar. Palm oil may revisit the Nov. 22, 2022 high of 4,029 ringgit per metric ton, said Reuters technical analyst Wang Tao.
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