Palm oil prices slip on concerns about high stocks

Malaysian palm futures are expected to end a four-session rally Monday as increased inventory levels weigh on the market. However, declining production and stronger demand will keep prices high. At midday, the benchmark March palm oil contract on the Bursa Derivatives exchange fell 17 ringgit (0.42%) to 4,072 Ringgit ($1,004.94) per metric ton.

Negative sentiment is weighing on the market due to high

David Ng, a proprietary?trader at Kuala Lumpur's Iceberg X Sdn. Bhd., stated that the levels of trading in Malaysia are increasing.

Ng stated that the expectation of a slower production?pace in the next few weeks and a stronger demand will support the prices in the short term.

The Malaysian Palm Oil Board will release its December data on supply and demand on January 12. Cargo surveyors estimate that Malaysian palm oil exports for December 1-25 increased between 1.6% to 3% compared to a month ago. Dalian's palm oil contract lost 0.42%, and its most active soyoil contract dropped 0.15%. Chicago Board of Trade soyoil prices were down by?0.04%.

Palm oil follows the price movement of other edible oils as it competes to gain a share in the global vegetable oils market. Investors weighed Middle East tensions which could disrupt supply and the Russia-Ukraine conflict as a major obstacle. Oil prices rose early in Asian trading.

Palm is a better option for biodiesel because crude oil futures are stronger. The palm currency, the ringgit (0.17%) has weakened against the dollar. This makes the commodity cheaper for buyers who hold foreign currencies. Technical analyst Wang Tao believes that palm oil could rise to 4,123 Ringgit per metric tonne after clearing a barrier at 4,078 Ringgit.

(source: Reuters)