Palm muted as higher output pressure rises and demand lags
- palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange fell 10 ringgit, or 0.22%, to 4,547 ringgit ($1,113.91) a metric ton
KUALA LUMPUR: Malaysian palm oil futures were range-bound on Thursday, as expectations of higher output weighed on the market, while export demand has yet to show any meaningful recovery.
The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange fell 10 ringgit, or 0.22%, to 4,547 ringgit ($1,113.91) a metric ton by the midday break.
The market currently lacks bullish sentiment, as production continues to ramp up while exports remain anaemic and have yet to show signs of recovery, said Paramalingam Supramaniam, director at brokerage Pelindung Bestari.
“With production momentum building, it is a matter of time before selling pressure weighs further on the market. For now, prices remain range-bound as participants await the Malaysian Palm Oil Board (MPOB) report.”
Supramaniam added that a build-up in stocks seems inevitable. MPOB is expected to release its monthly demand and supply data on July 10.
Dalian’s most-active soyoil contract rose 0.48%, while its palm oil contract shed 0.32%.
Soyoil prices on the Chicago Board of Trade were up 0.21%. Palm oil tracks the price movements of rival edible oils because it competes for a share of the global vegetable oil market.
Oil prices dropped about 1% for a third consecutive day after Qatar said Iran and the US had made progress in indirect talks focused on the Strait of Hormuz, which handles one-fifth of global oil supply.
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
The ringgit, palm’s currency of trade, strengthened 0.27% against the dollar, making the commodity slightly more expensive for buyers holding foreign currencies.
Indonesia’s new 50% biodiesel blending mandate took effect on Wednesday, requiring a fuel blend of half palm-based diesel and conventional diesel known as B50, even as stakeholders await a revised biodiesel allocation from the government.
Palm oil may test resistance at 4,587 ringgit per metric ton, a break above which could lead to a gain into the 4,604-4,619 ringgit range, Reuters technical analyst Wang Tao said.
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