SINGAPORE: Malaysian palm oil futures dropped on Monday amid weakness in rival edible oils and profit-taking although higher crude prices limited losses.
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange fell 52 ringgit, or 1.29%, to 3,965 ringgit ($838.44) a metric ton at midday.
The contract logged a nearly 2% weekly gain last week, the third straight week-on-week increase.
Dalian’s most-active soyoil contract fell 1.82%, while its palm oil contract slipped 0.82%. Soyoil prices on the Chicago Board of Trade dropped 0.26%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Palm prices have succumbed to mild profit-taking on Monday after weeks of rallying, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
“We are yet to see recovery in production. Thus, prices will remain supportive. Plantations and private millers are witnessing a double-digit drop in production,” he added.
Palm oil tracks Dalian rivals lower; set for third weekly gain
The scenario will remain the same in February, coupled with the long spell of holidays during Chinese New Year, Paramalingam said.
Top palm producer Indonesia’s meteorological agency issued warnings of heavy rain and strong winds in some of its palm oil-producing states from Jan. 28-30, including Sumatra and Kalimantan.
Cargo surveyor Societe Generale de Surveillance estimates exports of Malaysian palm oil products for Jan. 1-25 at 919,139 metric tons, according to LSEG.
The Malaysian ringgit, palm’s currency of trade, weakened 0.08% against the dollar. A weaker ringgit makes palm oil more attractive for foreign currency holders.
Oil prices climbed on Monday after a drone attack on U.S. forces in Jordan added to worries over supply disruption in the Middle East as Houthi rebels stepped up their attacks on vessels in the Red Sea, hitting a Trafigura-operated fuel tanker.
Palm oil may keep climbing into a range of 4,048 to 4,071 ringgit per metric ton, said Reuters technical analyst Wang Tao.
Comments