Palm logs weekly gains, but expectations of increased output cap the rise
Malaysian palm futures closed higher on Friday and posted a weekly gain. However, expectations of increased production capped the gains.
The benchmark contract for palm oil delivery in August on the Bursa Derivatives exchange gained 7 ringgit or 0.18% to 3,827 Ringgit ($905.16) per metric ton.
This week, the contract rose by 0.18%.
A Kuala Lumpur based trader reported that the crude palm oil price erased the majority of its morning gains following the release of production data from the Malaysian Palm Oil Association (MPOA) for the period May 1-20.
The trader revealed that MPOA's estimated production for that period increased by 3.51% on a monthly basis.
Dalian's soyoil contract with the highest volume of activity rose by 0.18% while palm oil contracts fell by 0.32%. Chicago Board of Trade soyoil prices rose by 1.16%.
As palm oil competes to gain a share in the global vegetable oil market, it tracks the price fluctuations of competing edible oils.
The oil prices fell for a fourth session in a row on Friday, and they were heading for their first weekly drop in three weeks. This was due to the rising expectation of another significant OPEC+ production increase for July.
Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.
The palm ringgit's trade currency strengthened by 0.98% compared to the U.S. Dollar, increasing the price of the commodity for foreign buyers. ($1 = 4.2280 ringgit) Reporting by Ashley Tang, Editing by Sumana Nandy & Shakesh Kuber
(source: Reuters)
