Palm snaps three-week winning run as El Nino worries weigh
Malaysian palm futures fell more than 1% on Friday as traders were cautious about El Nino's potential impact on future rain and production.
The benchmark 'palm oil contract' for August delivery at the Bursa?Derivatives?Exchange in Malaysia fell 72 ringgit or 1.58% to 4,479 Ringgit ($1,104.56), the lowest price since May 25.
The contract dropped 1.65% in this week's trading, ending three weeks of gains.
"There are subtle?recoveries in exports, but in a cautious way," Paramalingam Supramaniam said, director of brokerage Pelindung Bestari. Cargo'surveyors' estimated that Malaysian palm oil exports for the period June 1-10 rose between 3.5% to 4.9% from a month ago.
Supramaniam said that the market was expected to stay within a narrow?range, as participants waited for further developments regarding El Nino weather. It is widely believed to be reducing rainfall and impacting production. El Nino, a weather pattern that is predicted to bring hot, dry weather to Asia starting this month, may cause Malaysia's crop yields to drop by between 8% to 10% on average this year, according to the country’s economic minister.
Dalian's palm oil contract, which is the most active contract, fell by 0.48%. Prices of soyoil on the Chicago Board of Trade fell 1.85%.
Palm oil follows the price movement of rival edible oils as it competes to gain a share in the global vegetable oil market. Oil prices dropped over 4%, to their lowest level in almost two months. This was after U.S. president Donald Trump canceled new strikes against Iran.
Palm?as a biodiesel feedstock is less attractive due to weaker?crude oil prices. The palm currency, the ringgit, has strengthened by 0.22% against dollars, making it slightly more expensive to buyers with foreign currencies.
(source: Reuters)
