Palm slips due to weaker soyoil and rising production fears but still heads for a monthly gain

Malaysian palm oil futures fell on Tuesday due to soft soyoil and an expected rise in production. However, the contract is still on track for a monthly gain.

By midday, the benchmark palm oil contract on Bursa Malaysia's Derivatives exchange for September delivery had fallen 47 ringgit or 1.02% to 4,541 Ringgit ($1,116.55).

After two consecutive months of declines, the contract has gained 1.10% so far this month.

Markets traded lower during Asian hours as a result of the weakness in the soybean market. The expectation that production will increase in the next few weeks also weighed on sentiment. This was confirmed by David Ng, an Iceberg X Sdn Bhd proprietary trader in Kuala Lumpur.

Dalian's palm oil contract shed 0.25%, while the most active soyoil contract dropped 0.11%. Prices for soyoil on the Chicago Board of Trade fell by 0.51%. Palm oil follows the price movement of other edible oils as it competes to gain a share in the global vegetable oil market. Oil prices dropped and were set to decline for a second consecutive month, as investors 'eyed potential U.S. - Iran talks in Doha in light of a strained interim ceasefire during the four-month old war.

Palm oil is less appealing as a biodiesel feedstock because crude oil prices are weaker.

Later in the day, cargo surveyors will?release? their full-month estimates for June palm oil exports from Malaysia.

The dollar's value against the ringgit remained constant. Indonesia's palm oils exports in April were 2.78 millions tons, up from 1.78 million in the same period last year. Technical analyst Wang Tao believes that palm oil could 'test support at 4,513 Ringgit per ton due to a wave c.

(source: Reuters)