KUALA LUMPUR: Malaysian palm oil futures slipped on Monday and were set to snap a seven-session gaining streak, pressured by demand concerns in key destinations, although a decline in production and strength in rival Dalian vegetable oils limited losses.
The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange slid 19 ringgit, or 0.49%, to 3,837 ringgit ($825.52) by midday.
The decline in production in top producers, Indonesia and Malaysia, as well as Red Sea tensions will cap losses in Malaysian palm oil futures but demand concerns from destinations like China and India are also limiting gains, said Mitesh Saiya, trading manager at Mumbai-based firm Kantilal Laxmichand & Co.
Malaysia’s crude palm oil production plunged 13.31% from November to 1.55 million tons in December, while palm oil exports declined 5.12% to 1.33 million tons, data from industry regulator the Malaysian Palm Oil Board (MPOB) showed last week.
Exports of Malaysian palm oil products during Jan. 1-10 were estimated to be down between 3% and 10% from the same period in the previous month, according to surveyors Intertek Testing Services and AmSpec Agri Malaysia.
Dalian’s most-active soyoil contract ticked up 0.11%, while its palm oil contract added 0.44%.
Cut in import bill: Need for promoting cultivation of palm oil plants stressed
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Oil prices edged up on Monday as traders watched for supply disruption risks in the Middle East following strikes by US and British forces to stop Houthi in Yemen from attacking ships in the Red Sea.
O/R Stronger crude oil futures make palm a more attractive option for biodiesel feedstock. Malaysian palm oil output is set to improve this year due to easing labour shortage.
However, challenges persist as planters seek to comply with European and US regulations targeting the industry’s alleged connections to deforestation and forced labour, industry officials said at a seminar last Thursday.
Palm oil may gain more into 3,906-3,933 ringgit per metric ton, driven by a wave c, Reuters technical analyst Wang Tao said.