KUALA LUMPUR: Malaysian palm oil futures snapped a four-session rally on Monday, weighed down by higher inventories, though declines were kept in check by expectations of declining production and firmer demand.
The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange lost 40 ringgit, or 0.98 percent, to 4,049 ringgit (USD997.78) a metric ton by the close.
The market is being pressured by negative sentiment on high stock levels, said David Ng, a proprietary trader at Kuala Lumpur-based trading firm Iceberg X Sdn Bhd.
However, Ng said expectations of slower output and stronger demand in the coming weeks will support prices in the near term. The Malaysian Palm Oil Board is expected to release its December supply and demand data on January 12.
Cargo surveyors have estimated that exports of Malaysian palm oil products for December 1-25 rose by between 1.6 percent and 3 percent from a month earlier. The Dalian’s most active soyoil contract lost 0.28 percent while its palm oil contract shed 0.61percent.
Soyoil prices on the Chicago Board of Trade were down 0.1percent. Palm oil tracks the price movements of rival edible oils that compete for a share of the global vegetable oils market.
Crude oil prices, meanwhile, were up by more than USD1 as investors weighed talks between the US and Ukrainian presidents on a possible deal to end the war in Ukraine against potential oil supply disruption in the Middle East.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock. The ringgit, palm’s currency of trade, weakened by 0.32 percent against the dollar, making the commodity cheaper for buyers holding other currencies.
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