Palm oil prices fall due to profit-taking and Indonesia's B50 Mandat Plan
Malaysian palm futures fell on Thursday, as investors took profits. Meanwhile, a prominent Indonesian business group reportedly lobbied the government to postpone the B50 biofuel mandate.
By midday, the benchmark palm oil contract on Bursa Malaysia's Derivatives exchange for October delivery had fallen 41 ringgit or 0.92% to 4,394 Ringgit ($1,047.44).
A local news website quoted Eddy Martono, the chairman of the palm oil industry GAPKI as saying that the government should review the plan because it could lead to a decrease in palm oil exports.
GAPKI was told by a government official that it did not submit a written request.
Anilkumar bagani, the head of research for Mumbai-based Sunvin Group's vegetable oil broker Sunvin Group, said that futures were trading lower on the back of profit taking amid talks of a (GAPKI), which requested officials to delay (B50) as the industry was not ready.
Dalian's palm oil contract, which is the most active contract, fell by 0.72%. Chicago Board of Trade soyoil prices also fell 0.51%.
As palm oil competes to gain a share in the global vegetable oils industry, it tracks the price changes of competing edible oils.
China's preliminary antidumping duties on Canadian Canola will take effect on Thursday. This is a continuation of a trade dispute which began last August when Ottawa imposed tariffs on Chinese imports.
A circular posted on the Malaysian Palm Oil Board's website on Wednesday showed that Malaysia increased its crude palm oil price reference for September, which increases the export duty to 10%.
Oil prices rose on Thursday, as investors remained cautious that the U.S. - Russia summit on Ukraine scheduled for Friday would lead to an easing of Russian crude sanctions. Further action could be taken against buyers. A weak market outlook also capped gains.
Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.
The palm's trade currency, the ringgit, has strengthened by 0.24% versus the dollar. This makes the commodity more costly for buyers who hold foreign currencies.
Technical analyst Wang Tao stated that palm oil is still targeting a range between 4,388-4400 ringgits per metric tonne, after failing to break through strong resistance at the 4,455-ringgit level.
(source: Reuters)
