Export estimates: Palm oil falls due to weaker soyoil

Malaysian palm futures declined on Monday, reversing gains from the previous session, as lower soyoil and export estimates weighed heavily on the market.

By midday, the benchmark palm oil contract on Bursa Derivatives exchange for October delivery had fallen 41 ringgit or 0.95% to 4,274 Ringgit ($1,008.73).

David Ng, a proprietary trading at Kuala Lumpur's Iceberg X Sdn Bhd, explained that the lower prices of crude palm oil futures were due to the weaker price of soybean oil and the decline in exports so far.

Dalian's palm oil contract rose 0.38%, but its most active soyoil contract dropped 0.27%. Chicago Board of Trade soyoil prices were down by 0.27%.

As palm oil competes to gain a share in the global vegetable oils industry, it tracks the price changes of competing edible oils.

The palm ringgit's trade currency strengthened by 0.16% against dollars, increasing the price of the commodity for buyers who hold foreign currencies.

Oil prices barely moved as traders watched the impact of European sanctions on Russian supply, increased output from Middle East producers, and concerns over fuel outlooks as tariffs weighed heavily on global economic growth.

Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.

Intertek Testing Services, a cargo surveyor, estimated that the exports of palm oil products from Malaysia for July 1-20 were down 3.5% compared to a month ago. AmSpec Agri Malaysia is expected to release its export estimates later today.

Technical analyst Wang Tao stated that palm oil could retrace to a range between 4,254 and 4,273 ringgits per ton after failing to break through resistance at 4,354 rings.

(source: Reuters)