Palm slips due to weaker Chicago soyoil, but still on track for weekly gains

The market for Malaysian palm oils futures dropped on Friday. This ended a five session rally. It was a result of the weaker Chicago soyoil. However, it is still on track to gain a weekly profit.

At midday, the benchmark palm oil contract on Bursa Malaysia's Derivatives exchange for August delivery fell 72 ringgit or 1.83% to 3,860 Ringgit ($910.38) per metric ton.

This week, the contract has gained 1,99%.

Crude palm futures fell in line with the weakness of the Chicago soybean oil markets, according to David Ng, a proprietary trading at Kuala Lumpur's Iceberg X Sdn. Bhd.

He said: "We have identified support at 3,800 Ringgit and resistance at 3,550 Ringgit."

Dalian's palm oil contract, which is the most active contract, fell by 1.16% while soyoil prices dropped by 0.93%. Chicago Board of Trade soyoil prices were down by 2.91%.

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

The oil price is on course for a second weekly decline. This was largely due to expectations of a further OPEC+ production increase in July, and the new uncertainty that followed after Donald Trump's tariffs were kept in place by the latest legal twist.

Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.

The palm ringgit currency of trade remained unchanged in relation to the U.S. Dollar.

Technical analyst Wang Tao stated that palm oil could retrace back to 3,886 Ringgit per ton as it has broken its support at 3,912 Ringgit.

(source: Reuters)