Palm oil prices rangebound due to bullish demand and higher production forecast

The price of Malaysian palm oil futures was range bound on Monday. This was largely due to the bullish demand seen in July, and expectations that this momentum will continue into 'this month. However, rising production is expected, which may have capped gains.

By midday, the benchmark palm oil contract on Bursa Derivatives exchange for October delivery was up 15 Ringgit or 0.32% to 4,658 Ringgit ($1,138.32). The contract dropped by 0.85% during the previous session.

The Selangor brokerage Pelindung Bestari's director Paramalingam Supramaniam said that there are signs that the July exports have been better than those of the previous month, particularly for those sent to India. However, production will still be within the range analysts had estimated at 7% to 9% more, he added.

He added, "Everyone is looking forward to August and the expectation is that it will be as good as July."

Exports of palm oil-based products from Malaysia rose between 12.1% to 19.5% in July, according to cargo surveyors.

On August 10, the Malaysian Palm Oil Board will release its monthly data on supply and demand.

Dalian's palm oil contract dropped 0.44%, whereas the most active soyoil contract in Dalian fell 0.05%. Chicago Board of Trade soyoil prices were down by 0.34%.

Palm oil monitors the price movements of competing edible oils as it competes to?acquire a share of the global vegetable oils market.

Oil prices fell more than $4 per barrel after U.S. president Donald Trump held off on a new attack on Iran. He was seeking a quick agreement that would stop Tehran's nuclear aspirations and reopen Strait of Hormuz.

Palm is less appealing as a feedstock for biodiesel due to weaker?crude futures.

The palm ringgit's trade currency, the dollar, has weakened by 0.15%, making it slightly cheaper for buyers who hold foreign currencies.

(source: Reuters)