Palm prices fall for a second day due to high inventories and sluggish consumer demand
Malaysian palm futures dipped a little lower for the second consecutive session on Thursday. This was due to a gradual accumulation of stocks in Malaysia and Indonesia amid a sluggish market and weakness in rival edible oils in Chicago and Dalian.
By midday, the benchmark palm oil contract on Bursa Derivatives Exchange for October delivery had fallen 31 ringgit or 0.67% to 4,570 Ringgit ($1,122.85).
Anilkumar bagani, head of commodity research at Sunvin Group in Mumbai, said that there are relatively higher palm oil stockpiles both in Indonesia and Malaysia, as the demand for palm oil is slow and production continues to rise.
The delay in Indonesian releasing allocations to B50 biodiesel and the EUDR policy of deforestation are affecting palm oil price."
In May, Indonesian palm oil inventories rose 18.9% on an annual basis - after exports plummeted. Meanwhile, Malaysian palm oils stocks reached a four month high in June due to a recovery in production that outpaced the growth in demand.
A Kuala Lumpur-based broker said that "CPO futures will break from their current range when there is an improvement in demand and a slowdown in production."
Intertek Testing Services, AmSpec?Agri Malaysia and other cargo surveyors estimate that Malaysian palm oil exported for the period July 1-15 rose by between 4% to 12.4% compared with a month ago.
Further pressure was added to the market by the weakness of Chicago soyoil futures and Dalian palm oil futures.
Dalian's palm oil contract, which is the most active contract in Dalian, dropped by 0.88%. Prices of soyoil on the Chicago Board of Trade were down by 0.18%.
As palm oil competes to gain a share of the global vegetable oils' market, it tracks the price changes of its rival edible oils.
A circular posted on the website of 'the Malaysian Palm Oil Board' showed that Malaysia had raised its crude palm oil price reference for August to a level which maintains export duties at 10%.
Technical analyst Wang Tao believes that palm oil could revisit its high of 4,630 Ringgit per ton on?July 9, as it is about break a declining trendline.
(source: Reuters)
