Palm drops, ending a five-week rally and posting the steepest weekly loss since 16 months
Malaysian palm-oil futures fell more than 2% on the Friday, ending a five-week rally. Prices were pressured by fears that an increase in production could exceed demand due to 'the ongoing Middle East war,' even though inventories had fallen to a 7-month low.
At the close, the benchmark palm oil contract on Bursa Malaysia's Derivatives exchange was down 108 Ringgit or 2.33% at 4,535 Ringgit ($1,144.05).
This week's contract dropped 6.28%, the biggest weekly drop in almost 16 months.
Malaysian palm oil inventories fell in March. They were down for the third consecutive month, and they hit a seven-month high on an increase in exports that more than offset any modest rise in production.
Paramalingam Supramaniam is the director of brokerage Pelindung Bestari. She said that as we move into the peak production months - April, May and June - the destruction in demand caused by the Middle East conflict?and the higher freight costs?will begin to show up in the export figures for the period from 1-10 April.
"If exports do not keep pace with seasonal increases in production, then end stocks will rise again and cap any near-term improvement." "Exports must be robust, but given the current environment, it will be difficult," said Mr. He added.
Exports of palm oil products from Malaysia for April 1-10, according to cargo surveyors, fell between 30.7% - 38.9% on a monthly basis.
Dalian's palm oil contract, which is the most active contract in Dalian, rose by 0.11%. Chicago Board of Trade Soyoil Prices were down by 0.87%.
Palm oil tracks the price movement of competing edible oils as it competes to gain a share in the global vegetable oil market.
The price of oil rose, driven up by renewed anxiety about Saudi Arabian supplies and the fact that tanker traffic in the Strait of Hormuz was largely frozen.
Palm oil is a better option as a biodiesel source because crude oil futures are stronger. ($1 = 3.9640 ringgit)
(source: Reuters)
