Palm oil hits three-week low, posts second weekly loss

KUALA LUMPUR: Malaysian palm oil futures closed at a three-week low on Friday, posting a second straight weekly fall, as weaker rival Dalian oils weighed, while focus was also on the palm oil board’s demand and supply data, due next week, for further direction.

The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange slid 43 ringgit, or 0.95%, to 4,498 ringgit ($1,148.03) a metric ton, the lowest closing since April 17. The contract fell 1.58% this week.

The market is largely in consolidation mode, awaiting the release of the Malaysian Palm Oil Board (MPOB) data, said Paramalingam Supramaniam, director at brokerage Pelindung Bestari.

The MPOB is expected to release its monthly demand and supply data on Monday.

“The market is pegging end-stocks to remain within market expectations of around 2.3 to 2.5 million metric tons, and any significant deviation from that range will likely dictate the market’s next directional move,” Supramaniam said.

Keeping prices in check were the diverging prices of rival edible oils and crude oil, which palm tracks.

Dalian’s most-active soyoil contract fell 1.26%, while its palm oil contract shed 0.85%. Soyoil prices on the Chicago Board of Trade were up 0.5%.

Palm oil competes with other edible oils for a share of the global vegetable oils market.

Crude oil prices pared early gains, a day after renewed fighting near the Strait of Hormuz raised new questions about the ceasefire between the United States and Iran.

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

The ringgit, palm’s currency of trade, weakened 0.28% against the dollar, making the commodity slightly cheaper for buyers holding foreign currencies.