Palm prices fall as demand is threatened by high prices
Malaysian palm futures fell on Monday amid fears that recent high prices may dampen future demand.
At the midday break, the benchmark palm oil contract on Bursa Derivatives exchange for delivery in November fell 22 ringgit or 0.49% to 4,507 Ringgit ($1,073.86) per metric ton. The contract increased by 1.55% during the previous session.
Crude palm futures fell, retracing a portion of the gains made last week, as high prices could curb future demand. David Ng is a proprietary trader with Kuala Lumpur's trading firm Iceberg X Sdn. Bhd.
Palm oil is also less competitive due to a narrowing of the spread between soybean and palm oils. He added that "we see support at 4.450 ringgit, and resistance at 4600 ringgit".
Dalian's palm oil contract, which is the most active contract, rose 0.5%. Chicago Board of Trade soyoil prices were down 0.45%.
As palm oil competes to gain a share in the global vegetable oil market, it tracks price changes of competing edible oils.
Later in the afternoon, cargo surveyors will release their estimates of exports for August 1-25.
Oil prices rose after Ukraine intensified its attacks against Russia, causing concern that Russian oil supplies could be disrupted. Meanwhile, expectations of a reduction in U.S. rates boosted the outlook for global economic growth and fuel consumption.
Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.
The palm ringgit's trade currency strengthened by 0.66% versus the dollar. This made the commodity more costly for buyers who hold foreign currencies.
Indonesia's Trade Ministry urged the European Union (EU) to remove immediately countervailing duty on biodiesel imported after the World Trade Organization (WTO) backed Indonesia on several key claims made in a complaint filed with the trade body.
Technical analyst Wang Tao stated that palm oil is neutral between 4,475 and 4,542 ringgits per metric tonne, but an escape from this range could indicate a direction.
(source: Reuters)
