Palm retreats on profit-taking, weak demand

KUALA LUMPUR: Malaysian palm oil futures slipped on Wednesday after a two-session rally, as traders locked in profits and sluggish export demand weighed on the market.

The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange slid 21 ringgit, or 0.42%, to 4,952 ringgit ($1,225.44) a metric ton by the midday break.

The market succumbed to profit taking, while demand remains anemic as far as the palm sector is concerned, said Paramalingam Supramaniam, director at brokerage Pelindung Bestari.

Cargo surveyors estimated that exports of Malaysian palm oil products in August fell between 6.5% and 14.9% from a month earlier.

“India is basically well covered and the current hefty palm prices will likely not be favourable to them.

Traders will also be waiting for Malaysian Palm Oil Association data to get a better gauge on the production patterns in August and if the hot and dry weather has negatively impacted production,“ Supramaniam added. Dalian’s most-active soyoil contract eased 0.02%, while its palm oil contract shed 1%.

Soyoil prices on the Chicago Board of Trade were down 0.67%.

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

Oil prices rose in early trade, extending the previous session’s surge, as concerns over supply disruption intensified after the US and Iran exchanged strikes overnight, dimming hopes for a quick easing of tensions in the Middle East.

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

The ringgit, palm’s currency of trade, weakened 0.12% against the dollar, making the commodity slightly cheaper for buyers holding foreign currencies.

Palm oil may rise into a range of 5,032 ringgit to 5,083 ringgit per ton, as it has almost recovered from a drop to the August 28 low of 4,799 ringgit, Reuters technical analyst Wang Tao said.