KUALA LUMPUR: Malaysian palm oil futures dropped on Thursday for a second consecutive session, pressured by weaker soyoil prices and concerns over rising production in the weeks ahead.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange slid 50 ringgit, or 1.28%, to 3,844 ringgit ($903.41) a metric ton at the midday break.
Malaysian palm oil extends gains
Crude palm oil futures were trading lower on weaker soybean oil prices due to a fall in crude oil prices and negative external market sentiment, said David Ng, a proprietary trader at Kuala Lumpur-based trading firm Iceberg X Sdn Bhd. Ng added that concerns over rising output in the coming weeks are also pressuring the market.
“We see support at 3,800 ringgit and resistance at 3,980 ringgit,” he said. Dalian’s most-active soyoil contract fell 0.44%, while its palm oil contract shed 0.57%.
Soyoil prices on the Chicago Board of Trade were down 2.85%.
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Palm oil tracks price movements of rival edible oils, as it competes for a share of the global vegetable oils market.
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Oil prices eased as unexpected builds in US crude and fuel inventories raised demand concerns, while investors stayed cautious, focusing on renewed Iran-US nuclear talks.
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Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
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The ringgit, palm’s currency of trade, strengthened 0.28% against the dollar, making the commodity more expensive for buyers holding foreign currencies.
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Palm oil may test support at 3,866 ringgit per metric ton, a break below which could open the way toward 3,839 ringgit, Reuters technical analyst Wang Tao said.
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