Palm slips due to weak soyoil but is still on track to end its two-week slide

Malaysian palm futures fell on Friday due to weaker soyoil, and concerns over the potential for an excess of production. Traders are awaiting export data as they await further clues.

By midday, the benchmark 'palm oil contract' for a May delivery on Bursa Malaysia Derivatives Exchange had fallen 12 ringgit or 0.29% to 4,105 Ringgit ($1,050.95) per metric ton.

The contract is on track to end a two-week losing run after gaining 2% this week.

Anilkumar bagani, commodity researcher at Mumbai-based Sunvin Group, says that the market will be focusing on palm oil export data from February 1-20, as well as production data including full-month estimations.

Later in the day, cargo surveyors are expected to release their estimates for exports of palm oil products from Malaysia between February 1-20.

Bagani stated that the palm oil price decline was also due to a sharp drop in South American soyoil prices. The 'absence of Chinese markets and concerns over an early palm oil harvest in Malaysia or Indonesia ahead of Ramadan also contributed.

Indonesian exporters may be aggressive in their sales tactics to avoid extra March

export levies

He added that the downward pressure on palm prices was also a factor.

The Chicago Board of Trade reported a 0.5% drop in soyoil. Dalian Commodity Exchange will be closed during the Lunar New Year Holidays.

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

The price of crude oil rose as fears of conflict between Iran and the U.S. increased. Washington warned that Tehran would suffer if they did not reach a deal on its nuclear activities within days.

Palm oil is a more attractive feedstock for biodiesel due to the stronger crude oil futures.

The palm ringgit's trade currency, the dollar, rose 0.03%, making it slightly more expensive for buyers with foreign currencies.

Technical analyst Wang Tao stated that palm oil could test resistance at 4,169 ringgit a metric ton. A break above this level would lead to gains of up to 4,235 ringgit.

(source: Reuters)