Palm posts second weekly loss on selling pressure

JAKARTA: Malaysian palm oil futures posted its second weekly loss on Friday, even as it closed higher on the day, on the back of selling pressure from slow demand.

The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange rose 13 ringgit, or 0.32%, to 4,050 ringgit ($1,037.13) a metric ton at the close. It lost 2.5% for the week.

On Friday, the contract reversed earlier losses at the close after news that India’s palm oil imports jumped 51% in January from a month earlier to their highest in four months. A wider discount to rival soyoil encouraged refiners to step up purchases of the tropical oil. Soyoil imports, meanwhile, dropped to a 19-month low.

On the weekly loss, a Kuala Lumpur-based trader said, “The selling pressure mainly comes from the expected demand slowdown due to cheaper, alternative and stronger ringgit coupled with analysts’ moderate outlook on the palm futures.”

Dalian’s most-active soyoil contract was down 0.64% on the day, while its palm oil contract fell 1.76%. Soyoil prices on the Chicago Board of Trade dropped 0.47%.

Chinese markets will be closed from February 16 to 23 for the Lunar New Year holiday.

The ringgit, palm’s currency of trade, weakened 0.13% against the dollar, making the commodity cheaper for buyers holding foreign currencies.

Malaysia has raised its March crude palm oil reference price, a change that maintains the export duty at 9%, a circular on the Malaysian Palm Oil Board website showed.

Indonesia’s move to pause biodiesel expansion and expectations of higher production in the coming months are likely to pressure palm oil prices, although strong demand and slowing growth in overall output could limit the downside, analysts said.