Palm oil falls due to weakness in competing oils and profit taking
Malaysian palm futures declined on Friday due to profit booking and weaker edible oils on the Chicago and Dalian market. However, they remain on track for their seventh weekly gain in the last eight.
At the midday break, the benchmark palm oil contract on Bursa Derivatives exchange for September delivery fell 22 ringgit (or 0.54%) to 4,069 Ringgit ($963.08 a metric tonne). The contract is up 1.67% this week.
David Ng said that the prices of crude palm oil were lower due to overnight declines in prices for soybean oil and Dalian Palm Olein. He is a proprietary trader with Kuala Lumpur based trading firm Iceberg X Sdn Bhd.
He added that "profit-taking activities following the recent price rally also impacted the market."
Dalian's palm oil contract, which is the most active contract, fell 0.45%. Chicago Board of Trade soyoil fell 0.96%.
As palm oil competes to gain a share in the global vegetable oils industry, it tracks the price fluctuations of competing edible oils.
The oil prices were not much changed, as the Federal Reserve kept interest rates at the same level due to a strong U.S. jobs market. Investors are also waiting for clarity regarding President Donald Trump's tariff plans against various countries.
Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.
Palm's trade currency, the ringgit (the palm equivalent of the dollar), has fallen by 0.12%, making it cheaper for buyers with foreign currencies.
A survey shows that Malaysian palm oil inventories dropped in June for the first four-month period as production unexpectedly fell while demand for exports remained strong.
Technical analyst Wang Tao stated that palm oil prices may drop to 4,047 Ringgit per ton after a five-wave cycles from 3,947 Ringgit. ($1 = 4.2250 ringgit)
(source: Reuters)
