Palm slips on weaker soyoil, rising output fears, but heads for monthly gain

KUALA LUMPUR: Malaysian palm oil futures slipped on Tuesday as soft soyoil and an anticipated rise in production dragged on the market, though the contract was still on track for a monthly gain.

The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange slid 47 ringgit, or 1.02%, to 4,541 ringgit ($1,116.55) a metric ton by the midday break.

The contract has gained 1.10% so far this month after two straight months of declines.

The market traded lower, tracking weakness in the soybean oil market during Asian hours, while the expectation of rising output in the coming weeks is also seen weighing on sentiment, said David Ng, a proprietary trader at Kuala Lumpur-based trading firm Iceberg X Sdn Bhd.

Dalian’s most-active soyoil contract fell 0.11%, while its palm oil contract shed 0.25%. Soyoil prices on the Chicago Board of Trade were down 0.51%.

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

Oil prices dipped and were poised for a second month of declines, with investors eyeing potential US-Iran talks in Doha amid a strained interim ceasefire in the four-month-old war.

Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.

Cargo surveyors are expected to release their full-month June estimates for Malaysian palm oil product exports later in the day.

The ringgit, palm’s currency of trade, remained unchanged against the U.S dollar.

Indonesia’s palm oil exports, including refined products, were 2.78 million tons in April, versus 1.78 million tons in the same month last year, Indonesian Palm Oil Association data showed.

Palm oil may test a support at 4,513 ringgit per ton, driven by a wave c, Reuters technical analyst Wang Tao said.