Palm dips on weak demand, rising output

KUALA LUMPUR: Malaysian palm oil futures slipped more than 1% on Monday, weighed down by sluggish demand from key markets amid rising output.

The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange slid 62 ringgit, or 1.35%, to 4,535 ringgit ($1,148.10) a metric ton at the close. The contract rose 0.39% in the previous session.

Weaker Malaysian palm oil export performance, along with a higher production scenario in April, has dragged down palm oil prices, said Anilkumar Bagani, commodity research head at Sunvin Group, a Mumbai-based brokerage.

“Destination buying has been very quiet apart from some buying from China last week, but it has failed to support palm oil prices for the longer term,” he said.

Cargo surveyors estimated that exports of Malaysian palm oil products for April 1-25 fell between 15.7%and 16.8% from a month earlier.

Dalian’s most-active soyoil contract fell 0.45%, while its palm oil contract shed 0.05%. Soyoil prices on the Chicago Board of Trade were up 0.04%.

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

Oil prices jumped almost 3% as peace talks between the U.S. and Iran stalled and shipments through the Strait of Hormuz remained limited, keeping global oil supplies tight.

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

The ringgit, palm’s currency of trade, strengthened 0.3% against the dollar, making the commodity more expensive for buyers holding foreign currencies.