Palm prices rise on concerns about supply, but weak demand limits gains

On Thursday, the price of Malaysian palm oils reversed its losses to increase on concerns about supply and the strength of Chicago soyoil. However, weak demand limited gains.

After two consecutive sessions of falling, the benchmark palm oil contract on Bursa Malaysia's Derivatives exchange rose 22 ringgit (0.5%), or to 4,435 Ringgit per metric ton, by midday.

Paramalingam Supramaniam is the director of Selangor brokerage Pelindung Bestari. He said that "the much-anticipated rise in third-quarter output was not there."

Malaysian palm oil stocks reached a 20-month-high at the end of August due to an increase in production and a small drop in exports. This was according to data released by the Malaysian Palm Oil Board. The Malaysian Palm Oil Board reported that palm oil production in July and august was 1.87 % lower than the same period of last year.

The exports of palm oil products from Malaysia in the period September 1-10 fell between 1.2% to 8.4% compared with the same period last month, Intertek Testing Services cargo surveyor and AmSpec Agri Malaysia inspection firm said on Wednesday.

Supramaniam stated that the market still needs demand.

Dalian's palm oil contract, which is the most active contract in Dalian, was down by 0.49%. Chicago Board of Trade Soyoil Prices grew by 0.38%.

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

Palm oil could retest its support at 4,381 Ringgit per metric tonne. A break below this level would open the door to 4,343 Ringgit.

(source: Reuters)