Palm prices flatten on fears of higher production and weaker demand

Malaysian palm futures were little changed on Thursday due to a subdued demand from India and China. There are also rising expectations for increased production and a strengthening of the ringgit.

The benchmark palm oil?contract?for July delivery at Bursa Malaysia derivatives Exchange fell 2 ringgit or 0.04% to 4,495 Ringgit ($1,137.40), a metric tonne, at the close.

Paramalingam Supramaniam is the director of brokerage Pelindung Bestari. He said that demand remains a concern.

The strength of the ringgit also adds further pressure. These variables together are limiting market gains as rising production, "coupled with weaker demand," is likely to lead to a "build-up" of end stocks, said he.

Exports of palm oil-based products from Malaysia for the period April 1-15 were estimated to have fallen between 34.2% - 34.7% on a monthly basis, according to cargo surveyors.

The ringgit (palm's currency) has weakened by 0.05% versus the U.S. dollar but gained 0.20% in value since Monday. The stronger the ringgit, the more expensive palm oil is for holders of other currencies. Oil prices increased on Thursday after reversing previous declines as the market wondered if 'peace talks' between the U.S., Iran and other countries would result in a pact to end the war which has disrupted Middle Eastern energy supply.

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

Dalian's most active palm oil contract grew by 0.32%, while the soyoil contract grew by 0.57%. Prices of soyoil on the Chicago Board of Trade rose by 0.82%.

Palm oil monitors?the movements in price of rival edible oils as it competes to gain a share on the global vegetable oils markets.

(source: Reuters)