Palm prices fall after Dalian prices soften and profit-taking occurs

The price of Malaysian palm oil futures dropped on Thursday as lower rival oil prices led to profit-taking.

By midday, the benchmark palm oil contract for July delivery at the 'Bursa Malaysia derivatives Exchange' had fallen?12 Ringgit or 0.26% to 4,616 Ringgit ($1,164.48).

Anilkumar?Bagani, head of commodity research at Mumbai-based Sunvin?Group, said: "The futures traded lower today due to profit-taking. We saw a similar sentiment today in Dalian's Palm olein Futures during Asian hours and Wednesday night in Chicago's'soyoil' futures."

Dalian's palm oil contract dropped 0.03%, but its most active soyoil contract declined 0.05%. Soyoil prices at the Chicago Board of Trade fell by 0.35%.

Palm oil follows the price movement of rival edible oils as it competes to gain a share of "the global vegetable oil?market".

Bagani added that Indonesia's B50 allocations would also give an indication of the growth in palm oil use in biofuels. Indonesia will increase the required palm oil-based content of biodiesel from 40% to 50% starting July 1. The remaining portion is conventional diesel. The government is using the programme to reduce its dependency on expensive fuel imports. The oil prices?extended gains on Thursday as a result of the stalled peace talks between the United States and Iran.

Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.

The palm ringgit's currency has weakened by 0.35% compared to the dollar. This makes the commodity more affordable for buyers who hold foreign currencies.

Technical analyst Wang Tao stated that palm oil will 'test' a support level of 4,584 ringgits per metric ton as it has 'lost its momentum in relation to the resistance level of 4,639 ringgit.

(source: Reuters)