Palm oil prices slip on concerns about rising production and stocks
Malaysian palm futures ended lower on Monday due to concerns about the increasing stock and production levels. Prices were also impacted by weaker edible oils from Dalian.
At the close, the benchmark palm oil contract on Bursa Derivatives exchange for October delivery fell 59 ringgit (1.39%) to 4,186 Ringgit ($988.43). The contract increased by 0.35% Friday.
David Ng is a proprietary trader with Kuala Lumpur's trading firm Iceberg X Sdn. Bhd. He said that the price of crude palm oil fell amid increasing stocks and production in Malaysia.
The negative mood was also fueled by the lower Dalian prices in Asian hours. He said that he saw support at 4,180 and resistance at 4300 ringgit.
A survey shows that Malaysian palm oil inventories will rise for the fifth consecutive month, reaching their highest level in nearly two years. Production growth is outpacing exports.
On August 11, the Malaysian Palm Oil Board will release its monthly data on supply and demand.
Dalian's palm oil contract, which is the most active contract, fell 0.63% while soyoil prices rose 0.27%. The Chicago Board of Trade's (CBOT's) soyoil price fell by 0.13%.
As palm oil competes to gain a share in the global vegetable oil market, it tracks the price fluctuations of competing edible oils.
Oil prices fell after OPEC+ agreed on another large production increase in September. However, traders remained cautious about further sanctions against Russia.
Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.
Five dealers report that India's imports of palm oil fell in July due to cancellations of import contracts. However, soyoil exports surged at a three-year high, thanks to the competitive prices, and to deliveries of delayed shipments since June.
The palm's trade currency, the ringgit, has strengthened by 0.94% against dollars, making it costlier for buyers who hold foreign currencies. ($1 = 4.2350 ringgit)
(source: Reuters)
