Palm muted over El Nino fears, poised to gain fourth weekly profit
Malaysian palm futures were muted Friday as traders remained cautious about the impact El Nino could have on future production and rainfall.
By midday, the benchmark palm oil contract on the Bursa?Malaysia Derivatives Exchange remained unchanged at 4,551 Ringgit ($1,122 per ton).
The 'contract' has risen by 0.44% this week, and is still on course for a 4th consecutive weekly gain.
"There are subtle indications of a recovery in exports, although cautiously, but a sudden surge in production, especially in the Peninsula region, has also been noted," said Paramalingam Supramaniam. Director at brokerage Pelindung Bestari.
Exports of Malaysian palm oil products from June 1 to 10, according to cargo surveyors, rose between 3.5% - 4.9% compared with a month ago.
Supramaniam said that the market was expected to remain in a narrow range, as participants waited for further developments on El Nino. It is expected that this weather pattern will reduce rainfall and impact production.
El Nino, a weather pattern that is predicted to bring hot, dry weather across Asia starting this month, may cause Malaysia's crop yields to fall between 8 and 10 percent on average this year.
Dalian's most active soyoil contract grew by 0.26% while palm oil gained by 0.33%. Chicago Board of Trade Soyoil Prices were down by 0.73%.
As palm oil competes to gain a share in the global vegetable oils industry, it tracks the price fluctuations of competing edible oils.
After U.S. president Donald Trump cancelled his plans to attack Iran, fears of a escalation in hostilities were reduced following the tit-fortat attacks earlier this week.
Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.
The palm ringgit's currency has strengthened by 0.2% against the US dollar, making it slightly more expensive to buyers who hold foreign currencies.
Palm oil is about to break through resistance at 4,576 Ringgit per ton, and rise towards 4,613 Ringgit. technical analyst Wang Tao said.
1 Please enter the freight rate from Peninsula Malaysia/Sumatra, and then press Enter. Or, double-click between the brackets to view it. Double-clicking on the bracketed codes will show terminal users the cash and futures edible oils prices. To move to the next page of the same chain press F12. To go back, hit F11. 1
(source: Reuters)
