Palm retreats due to profit-taking and weak demand

Malaysian palm oil futures fell on Wednesday, after a two session?rally. Traders locked in profits as sluggish demand for exports weighed on the market.

By midday, the benchmark 'palm oil contract' for a November delivery on the Bursa Derivatives exchange had fallen 21 ringgit (0.42%) to 4,952 Ringgit ($1,225.44).

Paramalingam Supramaniam is the director of?brokerage Pelindung Bestari. He said that while profit-taking was prevalent, demand for palm oil remains low.

Exports of palm oil-based products from Malaysia in August fell between 6.5% to 14.9% compared with a month ago, according to cargo surveyors.

The 'current high palm prices' will not likely be in their favor. The Malaysian Palm Oil Association will provide traders with data on August production patterns and whether the dry and hot weather had a negative impact.

Dalian's palm oil contract, which is the most active contract, fell 1% while soyoil prices in Dalian dropped 0.02%. Chicago Board of Trade soyoil prices were down by 0.67%.

Palm oil monitors the price changes of competing edible oils in its competition for a share of global vegetable oils.

Early trade saw oil prices rise, continuing the previous session's increase, as fears grew over a disruption in supply after the U.S. & Iran exchanged strikes, dimming hopes of a rapid easing in tensions in the Middle East.

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

Palm's trade currency, the ringgit (?0.12%) against the dollar has weakened, making the commodity slightly more affordable for buyers with foreign currencies.

Technical analyst Wang Tao stated that palm oil could rise to a price range between 5,032 and 5,083 ringgit a ton. This is because it has recovered from its August 28 low, which was 4,799 ringgit.

(source: Reuters)