Palm extends its losses on weaker rival oils and is concerned about rising production, stocks

Malaysian palm futures fell for a second day on Monday. Prices were weighed down due to weaker rival edible oils and concerns about rising production and inventory levels.

The benchmark contract for palm oil delivery in October on Bursa Malaysia's Derivatives exchange fell 34 ringgit (0.8%) to 4,239 Ringgit ($1,002.60), a metric tonne, at the close.

David Ng, a proprietary trading at Kuala Lumpur's Iceberg X Sdn Bhd, explained that the price of crude palm oil fell during Asian hours due to the weakness in Dalian and soyoil markets.

He said that "rising production and stock levels can also be seen as weighing on the market sentiment."

Dalian's palm oil contract, which is the most active contract in Dalian, fell by 0.49%. Chicago Board of Trade Soyoil Prices fell 0.29%.

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

The price of oil edged up as investors analyzed a possible trade agreement between the United States, and the European Union. However, a stronger dollar and lower imports from India also weighed on the prices.

Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.

Exports of palm oil-based products from Malaysia for the period July 1-25 were estimated to be down between 9.2% and 15% compared to a month ago.

Palm's currency, the ringgit, has weakened by 0.24 percent against the U.S. Dollar, resulting in a slight price drop for foreign buyers. ($1 = 4.2280 ringgit)

(source: Reuters)