Palm slips 1% due to weaker soyoil and bearish MPOB data

The market was pressured by a decline in palm oil prices of more than 1%, and the weakness of rival soyoil, and bearish figures for demand and supply.

At the close, the benchmark contract for?palm?oil delivery in November on the Bursa Derivatives Exchange fell 81 ringgit or 1.63% to 4,885 Ringgit ($1,202.61).

David Ng, a proprietary 'trader' at Kuala Lumpur based trading firm Iceberg X Sdn. Bhd., explained that the market was lower primarily due to lower soybean oil prices.

Ng stated that the Malaysian palm oil?Board data is also bearish, with stocks rising higher month-on-month than the market expected.

He said that the sluggish export pace combined with the higher growth in output is the primary reason for the stock accumulation.

Data from MPOB revealed that Malaysian palm oil inventories reached a 'high of eight months in August, as production climbed to its highest level since December and exports decreased.

Exports of palm oil-based products from Malaysia for the period September 1-10 were estimated to have fallen between 11.7% and 175% compared with a month ago.

Brent oil prices increased, continuing gains made in the previous session that had taken Brent to $100 per barrel. Traders braced themselves for further supply disruptions following the United States and Iran launching their biggest attacks on shipping since the six-month conflict began.

Palm oil is more appealing as a biodiesel feedstock because crude?oil prices are higher.

Dalian's palm oil contract, which is the most active contract, fell by 1.37%. Prices of soyoil on the Chicago Board?Trade fell by 0.55%.

Palm oil follows the price movement of competing edible oils as it competes for a share of 'the global vegetable oils market.

The ringgit (the currency used to trade palms) strengthened by 0.17% in relation to the dollar. This made the commodity slightly less expensive for foreign currency buyers.

(source: Reuters)