KUALA LUMPUR: Malaysian palm oil futures snapped a two-day winning streak on Wednesday, having reversed earlier gains as rising output and inventory levels weighed on the market, although stronger rival edible oils and relatively bullish export data limited the fall.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange fell by 12 ringgit, or 0.31%, to 3,896 ringgit ($913.05) a metric ton at the close.
Crude palm oil futures traded higher earlier in the session due to the strength in the rival oilseeds market and positive export data, a Kuala Lumpur-based trader said.
However, the trader added that rising production and higher stocks capped prices.
Dalian’s most-active soyoil contract rose 0.23%, while its palm oil contract also added 0.35%. Soyoil prices on the Chicago Board of Trade were up 1.13%.
Palm oil tracks price movements of rival edible oils, as it competes for a share of the global vegetable oils market.
Cargo surveyors estimated that exports of Malaysian palm oil products during May 1-20 rose between 1.6% and 5.3%, compared with the same period a month ago.
Malaysian palm oil extends gains
The ringgit, palm’s currency of trade, strengthened 0.65% against the U.S. dollar, making the commodity more expensive for buyers holding foreign currencies.
Oil prices rose more than 1% as reports that Israel could be preparing to strike Iranian nuclear facilities raised fears of a supply disruption in the Middle East.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
Crude palm oil prices are expected to range between 3,750-4,050 ringgit in May before gradually recovering amid volatility in the vegetable oil and energy markets, the Malaysian Palm Oil Council said.
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