Palm oil supported by higher price outlook, weather expectations

Malaysian palm oil futures dipped at the close on Wednesday but trading sentiment remained supported by a leading analyst's upward revision of the price outlook ahead of monsoon rains. Benchmark palm oil futures for January on the Bursa Malaysia Derivatives Exchange was down 0.14 percent at 2,839 ringgit ($672.11) a tonne at the close.
Traded volumes stood at 42,886 lots of 25 tonnes each. A trader based in Kuala Lumpur said market was influenced by the revision in the price outlook by leading industry analyst, Dorab Mistry, at an industry conference in China on Wednesday. "Mistry now forecasts palm to be at 2,500 ringgit. He had been more bearish but now recognises that it is coming to the monsoon season," he said, noting that rains are expected to slow production down. "The market is influenced by the forthcoming weather conditions. Seasonally, November and December are when production drops due to the rains," he added.
Palm oil futures will drop to 2,500 ringgit by the end of December, Mistry said at the China International Oils & Oilseeds Conference in Guangzhou, the lowest since early September.
He had previously forecast 2,200 ringgit by end-2016. Earlier in the day, traders said the contract was tracking the volatility in global markets that were reacting to the US presidential election. Trump's initial lead had created negative trading sentiment for markets. "Global equities are under selling pressure along with most commodities prices except precious metal. There is no exception for palm oil," a trader based in Kuala Lumpur said.
Soyaoil prices on China's Dalian Commodity Exchange and the Chicago Board of Trade also continue to slide, putting a drag on palm's prices. Palm's performance is impacted by soyaoil, as they both compete for a share in the global vegetable oils market.
The December soyabean oil contract on the Chicago Board of Trade was 0.7 percent lower, while the January soyabean oil contract on China's Dalian Commodity Exchange fell 0.45 percent. In other related oils, the January contract for palm olein on China's Dalian Commodity Exchange rose 0.2 percent.