Palm closes lower but logs second weekly gain

KUALA LUMPUR: Malaysian palm oil futures ended lower on Friday as pressure from higher inventories weighed on the market, but the contract still logged a second week of gains.

The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange was down 13 ringgit, or 0.28%, at 4,711 ringgit ($1,153.53) a metric ton at the close. The contract rose 0.73% this week.

Prices were pressured by higher end-July stocks and weaker Chicago soyoil but concerns over El Niño-related weather disruptions and higher energy prices limited the losses, said David Ng, a proprietary trader at trading firm Iceberg X Sdn Bhd.

Malaysia’s palm oil stocks rose to a five-month high in July as production remained above rising export demand, data from the Malaysian Palm Oil Board showed on Monday.

Dalian’s most-active soyoil contract rose 1.04%, while its palm oil contract added 1.43%. Soyoil prices on the Chicago Board of Trade were down 0.37%.

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 and were on track for weekly gains after the United States threatened an indefinite naval blockade of Iran, raising concerns about disruptions to crude supplies from the Middle East

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

India’s edible oil imports rose to their highest level in 10 months in July as refiners stepped up purchases of palm oil and soyoil to replenish inventories ahead of the festival season, Solvent Extractors’ Association of India said.

Meanwhile, Indonesian President Prabowo Subianto said that a new state export firm will monitor key commodity shipments and its role will be expanded, but said it would not take over control of exports.

Prabowo also said that the country will operate a mineral and strategic commodities bourse starting January 1 next year, which will set reference prices for Indonesia’s main commodities.