JAKARTA: Malaysian palm oil futures dropped on Thursday, erasing earlier gains, amid uncertainty over production growth and some correction in rival vegetable oils.
The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange closed down 0.54% at 4,249 ringgit ($901.55) per metric ton, after rising as much as 0.96% earlier in the day.
The contract weakened after the Southern Peninsular Palm Oil Millers Association (SPPOMA) reported higher output figures for March 1-20, a Kuala Lumpur-based trader said, and as rival palm oil on the Dalian exchange gave up most of its gains.
The SPPOMA data showed production for the period was up 22.4%, the trader said, while market awaited wider production data from the Malaysian Palm Oil Association for further guidance.
Dalian’s palm oil contract rose 0.7% on Thursday, scaling back from intraday gains of 2.87% which had brought it to its highest level since Dec. 2022.
Meanwhile, Dalian’s soyoil contract rose 1.36% and soyoil prices on the Chicago Board of Trade were barely changed.
Palm oil rebounds on strong exports
Palm oil is affected by price movements in related oils as they compete for a share of the global vegetable oils market.
“On the physical side, actually palm demand is not that great. The supply is there, and some places rival oils are comparatively cheaper than palm. To have continuation of upside for CPO (crude palm oil) futures, rival oilseeds have to go higher,” another trader said.
Exports of Malaysian palm oil products for March 1-20 were seen up between 7.4% and 16.3% from the same period last month, cargo surveyors Intertek Testing Services and Amspec Agri said.
Palm oil may rise into a range of 4,751-4,859 ringgit per metric ton in the second quarter, Reuters technical analyst Wang Tao said.
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