Palm slips on demand as prices rise
Malaysian palm futures fell on Monday as fears that recent high prices could dampen future demand weigh on the market.
At the close, the benchmark palm oil contract on Bursa Derivatives Exchange for November delivery fell 36 ringgit or 0.79% to 4,493 Ringgit ($1,068.49). The contract increased by 1.55% during the previous session.
Crude palm futures fell, retracing a portion of the gains made last week, as high prices could curb future demand. David Ng is a proprietary trader with Kuala Lumpur's trading firm Iceberg X Sdn. Bhd.
Palm oil is also less competitive due to a narrowing of the spread between soybean and palm oils. He added that "we see support at 4.450 ringgit, and resistance at 4600 ringgit".
Dalian's palm oil contract, which is the most active contract, rose by 0.38%. Chicago Board of Trade soyoil prices were down by 0.22%.
As palm oil competes to gain a share in the global vegetable oils industry, it tracks the price changes of competing edible oils.
Exports of palm oil-based products from Malaysia for the period August 1-25 increased between 10.9% to 16.4% compared with a month ago, according to cargo surveyors.
Oil prices rose as traders assessed the possibility that Russian supplies could be disrupted due to additional U.S. sanctions or Ukrainian attacks on energy infrastructure in Russia.
Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.
The palm ringgit's trade currency strengthened by 0.47% to the dollar. This made the commodity more costly for buyers who hold foreign currencies.
Indonesia has urged the European Union (EU) to immediately scrap countervailing duty on biodiesel imports after the World Trade Organization (WTO) backed Jakarta's major claims in its complaint to that trade body. ($1 = 4.2050 ringgit)
(source: Reuters)
