KUALA LUMPUR: Malaysian palm oil futures closed lower on Monday, weighed down by concerns over the rising stock and output levels, while weaker Dalian edible oils also pressured prices.
The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange slid 59 ringgit, or 1.39%, to 4,186 ringgit ($988.43) a metric ton at the close. The contract rose 0.35% on Friday.
Crude palm oil traded lower amid rising stocks and production levels in the country, said David Ng, a proprietary trader at Kuala Lumpur-based trading firm Iceberg X Sdn Bhd.
“Weaker Dalian prices during Asian hours also supported the negative sentiment. We see support at 4,180 ringgit and resistance at 4,300 ringgit,” he said.
Malaysia’s palm oil inventories are forecast to rise for a fifth consecutive month in July to reach their highest level in almost two years, as production growth outpaced exports, a Reuters survey showed.
The Malaysian Palm Oil Board is expected to release its monthly supply and demand data on August 11.
Palm rises but logged second weekly loss
Dalian’s most-active soyoil contract rose 0.27%, while its palm oil contract shed 0.63%. Soyoil prices on the Chicago Board of Trade (CBOT) fell 0.13%.
Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market.
Oil prices dropped after OPEC+ agreed to another large output hike in September, though traders remained wary of further sanctions on Russia.
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
India’s palm oil imports fell in July because of cancellations in import contracts, while soyoil shipments surged to a 3-year high due to competitive prices and the delivery of delayed shipments from June, according to five dealers.
The ringgit, the palm’s currency of trade, strengthened 0.94% against the dollar, making it more expensive for buyers holding foreign currencies.
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