Palmettos end lower due to production growth and lacklustre demand
Malaysian palm oil futures fell for the seventh consecutive session on Wednesday and reached their lowest level since September on concerns about an increased palm production as well as lacklustre demand by major consumer countries.
The benchmark contract for palm oil delivery in July on the Bursa Derivatives exchange lost 65 ringgit or 1.71% to $3,727 ringgit (US$880.05) per metric ton. The Farm Trade in Kuala Lumpur, a consulting and trading firm, said that palm oil prices had dropped rapidly due to increased palm production and the U.S. government's biofuel policies.
He said that these are good levels to invest in and that prices will recover before falling again in the third-quarter.
Dorab Mistry, an industry analyst, said that Malaysian palm futures will likely continue to decline from June through November and trade at a low of 3,500 Ringgit ($826.50) per metric tonne as a recovery in production results in a build-up of stocks.
Dalian's soyoil contract with the highest volume of trading rose by 0.44% while palm oil contracts fell by 0.88%. Chicago Board of Trade soyoil prices were up by 0.85%.
As palm oil competes to gain a share in the global vegetable oils industry, it tracks the price fluctuations of competing edible oils.
The oil prices increased by about 1%, gaining a second session. This was due to the positive investor sentiment surrounding U.S.-China talks that will be held this coming weekend, and signs of a lower U.S. shale production.
Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.
The palm currency, the ringgit, has weakened by 0.12% against the U.S. Dollar, making it cheaper for foreign buyers. $1 = 4.2350 Ringgit (Reporting and editing by Mrigank Dahniwala, Janane Venkatraman).
(source: Reuters)
