Palm prices flatten as weak exports offset supply concerns from Indonesia

Malaysian palm oils futures were little changed on Wednesday as weak export data offset concerns that Indonesia's plans to create a state agency for commodity exports might tighten up supplies.

The benchmark palm-oil contract for August delivery at Bursa Malaysia's Derivatives exchange fell 2 ringgit or 0.04% to 4,583 Ringgit ($1,154.99), a metric tonne, by the close.

The Indonesian president Prabowo Subianto told the parliament on Wednesday that an Indonesian state company will be created to manage exports of natural resources.

Paramalingam Supramaniam of brokerage Pelindung Bestari said that Indonesia's decision is expected to maintain the market as supportive and resilient, since the likelihood of aggressive sales remains low, given the possibility buyers could shift their demand to Malaysia.

He said that buyers' attention could turn to Malaysia while they wait for more information about the Indonesian mechanism.

Exports of Malaysian palm products between May 1 and May 20 were estimated to have fallen between 13.9% and 20% from the previous month.

Dalian's palm oil contract gained 1.44%, while the most active soyoil contract increased by 1.31%. Chicago Board of Trade soyoil prices were up by 0.24%.

As palm oil competes to gain a share in the global vegetable oil market, it tracks the price movement of competing?edible oils.

Oil prices fell about 1% when U.S. president Donald?Trump reiterated that the Iran War will end "very soon," but investors remain wary of?the outcome?of peace talks, as Middle Eastern supply disruption continues.

Palm oil is less attractive as a biodiesel feedstock due to the weaker crude oil futures.

The palm ringgit's currency has strengthened by 0.18% compared to the dollar. This makes the commodity slightly less expensive for buyers who hold foreign currencies.

Malaysian palm oil production is reducing replanting due to rising costs of fuel and fertiliser. Also, the price of vegetable oil has increased. This causes farmers to delay the crucial exercise that ensures the supply of the most widely used edible oils in the world.

(source: Reuters)