Palm oil prices fall on lacklustre demand and production outlook
Malaysian palm oil futures continued to decline on Wednesday, extending their losses for the seventh consecutive session on concerns about an increased palm production and a lacklustre demand by major consumer countries.
By midday, the benchmark contract for palm oil delivery in July on the Bursa Derivatives Exchange had fallen 38 ringgit or 1% to 3,754 Ringgit ($886.63) per metric ton. The Farm Trade in Kuala Lumpur, a consulting and trading firm, said that palm oil prices had dropped rapidly due to increased palm production and the U.S. government's biofuel policies.
He said that prices will recover to these levels and then fall in the third quarter.
Dalian's soyoil contract with the highest volume of trading rose by 0.44% while palm oil contracts fell by 0.95%. Chicago Board of Trade soyoil prices rose 1.65%.
As palm oil competes to gain a share in the global vegetable oils industry, it tracks the price fluctuations of competing edible oils.
Investors focused on U.S. China trade talks and signs that U.S. oil production is declining.
Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.
The palm's trade currency, the ringgit, has weakened by 0.09% versus the U.S. Dollar, making it cheaper for buyers who hold foreign currencies.
According to Wang Tao, a technical analyst, palm oil could fall to 3,702 Ringgit per metric tonne, due to wave c.
(source: Reuters)
