Palm prices slip on low demand and expectation of higher production
Malaysian palm oil futures declined on Thursday due to a combination of factors including?low demand from India and China as well as rising expectations for?increased output and a strengthening ringgit.
By midday, the benchmark palm 'oil contract' for July delivery at the Bursa Derivatives exchange in Malaysia had fallen 43 ringgit (0.96%) to 4,454 Ringgit ($1,127.59).
Paramalingam Supramaniam, Director at brokerage Pelindung Bestari, says that demand remains a concern. This is especially true for key importers India, and China where the buying interest has been low.
The strength of the Ringgit also adds further pressure. Together, these variables are limiting market gains as rising production coupled with weaker demand will likely result in a buildup of end stock, he said.
According to cargo surveyors, the?exports?of Malaysian palm oil products between April 1-15 were down between 34.2%-34.7% on a monthly basis.
The palm oil currency, the ringgit (also known as the dollar), was unchanged in relation to the U.S. dollar but gained 0.25% on Monday. Palm oil becomes more expensive when the ringgit is stronger.
Oil prices were unchanged, after reversing previous declines. This was due to a skepticism about the peace talks between Iran and the U.S., which could end the war, which has been preventing oil production from the Middle East.
Palm oil is less appealing as a biodiesel feedstock due to weaker crude oil futures.
Dalian's palm oil contract, which is the most active, fell 0.05% while soyoil prices rose 0.4%. The Chicago Board of Trade saw a 0.31% increase in soyoil prices.
Palm oil follows the price movement of competing edible oils as it competes for a share of 'the global vegetable oils market.
Technical analyst Wang Tao stated that a retracement chart suggests that palm oil could extend its gains to a range between 4,529 and 4,566 ringgits per ton. ($1 = 3.9500 ringgit) (Reporting by Ashley Tang; Editing by Subhranshu Sahu)
(source: Reuters)
