Palm slips, but still logs weekly gain to snap two-week decline

KUALA LUMPUR: Malaysian palm oil futures closed lower on Friday, weighed down by weaker soyoil, overproduction concerns and sluggish export demand, though the contract still posted a weekly gain after two straight weeks of losses.

The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange slipped 27 ringgit, or 0.66%, to 4,090 ringgit ($1,048.72) a metric ton at the close.

The contract gained 0.99% this week.

The market is focused on February 1-20 palm oil export as well as production data, including full-month estimates, said Anilkumar Bagani, commodity research head at Mumbai-based Sunvin Group.

Cargo surveyors estimated that exports of Malaysian palm oil products for February 1-20 fell between 8.9% and 12.6%.

“A sharp decline in the South American soyoil basis has also resulted in falling palm oil prices, while the absence of Chinese markets, as well as concerns about an early palm oil harvest in Malaysia and Indonesia ahead of Ramadan have also contributed to the decline,” Bagani said.

Potential aggressive selling by Indonesian exporters seeking to avoid additional March export levies also contributed to downward pressure on palm oil prices, he added.

Soyoil prices on the Chicago Board of Trade were down 1.02%. The Dalian Commodity Exchange is closed for the Lunar New Year holidays.

Palm oil tracks price movements of rival edible oils, as it competes for a share of the global vegetable oils market.

Oil prices hovered near six-month highs on Friday, headed for their first weekly gain in three on growing concerns a conflict may erupt after Washington said Tehran will suffer if it does not agree a deal on its nuclear activity in a matter of days.

Elevated crude oil futures make palm a more attractive option for biodiesel feedstock.

The ringgit, palm’s currency of trade, edged up 0.13% against the dollar, making the commodity slightly expensive for buyers holding foreign currencies.