Palmetto ends lower in second session due to output outlook and bullish demand
Malaysian palm futures fell on Monday for the second consecutive session as a result of a 'rising production' that was expected. However, a bullish demand from July and expectations that this momentum would continue into August capped off the drop.
At the close, the benchmark contract for palm oil delivery in October on Bursa Derivatives exchange was down 14 Ringgit (0.3%), at 4,629 Ringgit ($1,130.96). The contract dropped 0.85% during the previous session.
Paramalingam Supramaniam is the director of Pelindung Bestari, a brokerage based in Selangor. He said that there are signs July's?exports will be better than those from the previous month, particularly for India. However, production levels for?July should remain at the level analysts had predicted, which was 7% to 10% higher.
"All eyes will be on August, and it is expected that the demand will be just as strong as in July," he said. Cargo surveyors estimated that the exports of palm oil products from Malaysia for July increased between 12.1% to 19.5% compared to a month ago.
Survey showed that Malaysian palm oil exports increased 14.8% in July, as production grew by 7.4%. This pushed inventories to their highest level in five months.
On August 10, the Malaysian Palm Oil Board will release its monthly data on supply and demand.
Dalian's palm oil contract, which is the most active contract, fell by 0.88%. Prices of soyoil on the Chicago Board?Trade fell by 0.21%.
As it competes to gain a share in the global vegetable oil market, palm oil monitors the price movement of competing?edible oils.
Oil prices dropped by more than $4 per barrel after U.S. president Donald Trump decided to hold off on a new attack?on Iran in order to reach a quick agreement that would stop Tehran's nuclear aspirations and reopen?the Strait of Hormuz.
Weaker crude futures make palm a less appealing option as a?biodiesel source.
The palm ringgit's trade currency, the dollar, has weakened by 0.24%, making it slightly cheaper for foreign buyers.
(source: Reuters)
