Palm in line to snap winning streak, tracking rival oils

KUALA LUMPUR: Malaysian palm oil futures on Tuesday were in line to snap four consecutive sessions of gains, as the market dipped tracking a weaker performance in rival oils and on slow export demand.

The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange fell 1 percent to 2,463 ringgit ($575.33) a tonne at the midday break.

Palm is down nearly 6 percent for the second quarter of the year from the previous quarter so far, as an output increase puts pressure on prices.

Traded volumes stood at 11,248 lots of 25 tonnes.

"Palm oil declined as it was dragged down by a weaker overnight market, and partly on export weakeness," said a Kuala Lumpur-based trader, referring to the drop in soyoil on the Chicago Board of Trade.

Palm oil prices are impacted by the movements of related edible oils such as soyoil, as they compete for a share in the global vegetable oils market.

Soybean oil on the Chicago Board of Trade slipped as much as 0.3 percent, after closing down 0.9 percent in the previous session.

In other related oils, the September soybean oil on the Dalian Commodity Exchange lost as much as 1.5 percent, while the September palm olein contract dropped up to 1.7 percent.

Demand for the tropical oil is also seen weakening in June following the end of the Muslim Ramadan season. Shipments fell 14.8 percent during June 1-20 versus the corresponding period last month, according to data from cargo surveyor Intertek Testing Services on Tuesday.

The fasting month of Ramadan, which began at end-May this year, typically sees Muslism break day-long fasts with communal feasting. This incurs higher palm oil usage for cooking purposes, though buyers usually stock up on supplies a month before the festivities begin.