Palm oil falls due to weak edible oils from rivals, increasing production, and a sluggish market.
Malaysian palm futures fell on Thursday, ending two sessions of gains. The price was weighed down by rival edible oil, while rising production and weak export demand also added pressure.
At midday, the benchmark palm oil contract on Bursa Malaysia's Derivatives exchange for October delivery fell 28 ringgit (0.65%) to 4,250 Ringgit ($1,000).
During Asian hours, Crude Palm Oil Futures fell in line with the weakness of the Chicago soybean oil market and Dalian palm olein, according to David Ng, a proprietary trading at Kuala Lumpur based trading firm Iceberg X Sdn. Bhd.
He said that "the persistent concern about rising production and weak export added additional pressure to the market."
Later in the afternoon, cargo surveyors are expected to release their estimates for July's exports.
Dalian's palm oil contract, which is the most active contract, fell by 0.51%. Chicago Board of Trade soyoil prices were down by 0.82%.
As palm oil competes to gain a share in the global vegetable oils industry, it tracks the price changes of competing edible oils.
Brent crude, the benchmark oil, was down 0.33% to $73 per barrel at 0545 GMT. Palm oil is less appealing as a biodiesel feedstock due to weaker crude oil futures.
The palm ringgit's trade currency, the dollar, has weakened by 0.35%, making the commodity more affordable for buyers who hold foreign currencies.
The Plantation and Commodities Ministry reported that Malaysian palm oil exported to the United States between January and May increased by 51.8% compared to a year ago to 93,000 tons. $1 = 4.2500 Ringgit (Reporting and editing by Ashley Tang)
(source: Reuters)