Palm falls on profit-taking, weak demand

KUALA LUMPUR: Malaysian palm oil futures fell on Wednesday after a two-session rally, pressured by profit-taking and weak export demand.

The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange slid 13 ringgit, or 0.26%, to 4,960 ringgit ($1,226.81) a metric ton at the close.

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 rose 0.45%, while its palm oil contract shed 1.04%. Soyoil prices on the Chicago Board of Trade were down 0.34%.

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

Oil prices were little changed after climbing to more than one-month highs earlier in the session as traders weighed the risk of supply disruptions following overnight U.S. and Iranian strikes against signs that crude supplies continue to reach the market.

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

The ringgit, palm’s currency of trade, weakened 0.17% against the dollar, making the commodity slightly cheaper for buyers holding foreign currencies.