KUALA LUMPUR: Malaysian palm oil futures were little changed on Thursday, amid subdued demand from major importers India and China, rising expectations of increased production, and a strengthening ringgit.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange slid 2 ringgit, or 0.04 percent, to 4,495 ringgit (USD1,137.40) a metric ton at the close.
Demand remains a concern, particularly from key importers India and China, where buying interest has been subdued, even as production is expected to improve as it heads into the second quarter, said Paramalingam Supramaniam, director at brokerage Pelindung Bestari.
“The strength of the ringgit is also adding further pressure. Together, these variables are capping market gains, as rising output, coupled with weak demand, is likely to result in a build-up of end stocks,” he said.
Cargo surveyors estimated that exports of Malaysian palm oil products for April 1-15 fell between 34.2 percent and 34.7 percent month-on-month.
The ringgit, palm’s currency of trade, weakened 0.05 percent against the U.S dollar, but has gained 0.20 percent since Monday. A stronger ringgit makes palm oil more expensive for other currency holders.
Oil prices rose on Thursday, reversing earlier declines, as the market questioned whether peace talks between the US and Iran would achieve a deal to end the war that has caused unprecedented disruption of Middle Eastern energy supplies.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
Dalian’s most-active soyoil contract rose 0.57 percent, while its palm oil contract gained 0.32 percent. Soyoil prices on the Chicago Board of Trade were up 0.82 percent.
Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market.
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