Palmetto falls due to profit booking and increased stocks; set for weekly losses
The price of Malaysian palm oils futures reversed gains made earlier in the week and was headed to a weekly drop on Friday as traders booked profits before a long weekend holiday. Additionally, elevated inventories weighed on sentiment.
By midday, the benchmark palm oil contract on Bursa Malaysia's Derivatives Exchange fell 13 Malaysian Ringgit (or 0.29%) to 4,441 Malaysian Ringgit ($1,055.37). Earlier in the session, it rose up to 0.75%.
The contract has fallen 0.16% for the entire week.
The market will be closed on the 15-16th of September for a holiday.
A Kuala Lumpur trader stated that the futures are cashing in on the recent rally due to the weaker Dalian data, the Malaysian Palm Oil Board's (MPOB) weaker data, the export slowdown, and the upcoming long holiday.
Data from the MPOB earlier this week showed that Malaysian palm oil stocks reached a 20-month-high at the end of August as production increased while exports fell slightly.
Dalian's two most active palm and soyoil contracts, which had both made gains in the past few months, also pared those gains. They were now up by 0.6% and 0.69 % respectively. The Chicago Board of Trade's (CBOT), soyoil price, fell 0.31%.
As palm oil competes to gain a share in the global vegetable oils industry, it tracks the price fluctuations of competing edible oils.
Chicago soybeans and corn, along with wheat, were all on course for gains this week as traders adjusted their positions in advance of an important U.S. Supply and Demand report.
Crude oil fell on Friday due to concerns over a possible easing of U.S. consumer demand and a large amount of supply.
Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.
The palm ringgit's trade currency strengthened by 0.26% against dollars, increasing the price of the commodity for buyers who hold foreign currencies.
Technical analyst Wang Tao stated that palm oil could extend gains up to 4,506 Ringgit per metric tonne, as a pattern of flattening might be developing.
(source: Reuters)
