SINGAPORE: Malaysian palm oil futures rebounded from a two-day fall on Friday amid declining yields and ample domestic demand, while higher oil prices also supported, although the contract still closed lower for the week.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange closed up 22 ringgit, or 0.57%, to 3,896 ringgit ($817.63) a metric ton.
The contract lost 0.76% week-on-week.
Yields are still declining, and May production numbers may not see a significant increase, while local demand, especially for biodiesel, remains largely intact, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
However, selling pressure regained momentum on Friday amid bearish undertones in the Dalian Commodity Exchange as traders continued to sell their positions in anticipation of further losses in the market, making it “difficult for palm to reverse this sell-off, albeit the strong fundamentals”, Supramaniam added.
Palm oil extends decline on weaker rivals, higher production
Dalian’s most-active soyoil contract fell 0.03%, while its palm oil contract traded flat. Soyoil prices on the Chicago Board of Trade rose 0.18%.
Soyoil rose as dry and hot weather throughout the season in northern Argentina may lead the Buenos Aires grains exchange to reduce its estimate for the country’s 2023/24 soybean crop.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Oil prices rose on Friday, on track to end higher this week after two straight weeks of losses, after a top U.S. official expressed optimism over economic growth and as supply concerns lingered due to conflicts in the Middle East.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
The Malaysian ringgit strengthened 0.19% against the dollar.
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