Palm oil falls on rival oils; market waits for production forecasts in May

The price of palm oil in Malaysia reversed its gains on Tuesday. They continued to decline for the sixth consecutive session due to weaker oils on the Dalian and Chicago market. Meanwhile, the focus shifted from the May production forecasts.

At the close, the benchmark July palm oil contract on Bursa Derivatives Exchange fell 35 ringgit (0.91%) to 3,792 Ringgit ($896.45) per metric ton. Dalian's palm oil contract lost 1.63%, while the most active Dalian soyoil contract dropped 0.49%. Chicago Board of Trade soyoil prices were down by 0.23%.

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

Anilkumar bagani, research head at Mumbai-based Sunvin Group, said that the futures prices opened lower, but recovered steadily. The high production gains scenario for April has been traded out, so the focus now is on the performance of the May month.

The palm's trade currency, the ringgit, fell by 0.83% in relation to the U.S. Dollar, making it cheaper for buyers who hold foreign currencies.

Tuesday's oil price rose by more than $1.50 a barrel, boosted by technical factors and bargain-hunting after OPEC+ decided to increase output, which had sent prices lower in the previous session. However, concerns over a surplus on the market persisted.

Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger. $1 = 4.2300 Ringgit (Reporting and editing by Janane Venkatraman; Mrigank Dhaniwala, Shrey Biswas and Janane Venkatraman)

(source: Reuters)