Palm oil gains despite weakening of rival oils and profit-taking

Malaysian palm futures ended lower on Friday due to profit booking and weaker edible oils in Chicago and Dalian. However, the contract managed to record its seventh weekly increase in eight weeks.

At the close, the benchmark palm oil contract on Bursa Derivatives Exchange for September delivery fell 29 ringgit or 0.71% to 4,062 Ringgit ($963.02), a metric tonne. The contract increased by 1.27% in the past week.

David Ng said that the prices of crude palm oil were lower due to a decline 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 in Dalian, fell by 0.07%. Chicago Board of Trade soyoil fell 0.96%.

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

Oil futures dropped slightly after Iran reaffirmed their commitment to non-proliferation. Major producers in the OPEC+ are expected to agree this weekend to increase their production.

Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.

The palm ringgit's trade currency strengthened by 0.05% versus the dollar. This made the commodity a little more expensive for buyers who hold 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. ($1 = 4.2180 ringgit)

(source: Reuters)