Profit taking on palm oil as it slips against inferior edible oils

Malaysian palm futures continued to fall on Thursday. They followed the weaker edible oils in Chicago and Dalian, as well profit-taking actions.

By midday, the benchmark contract for palm oil delivery in August on the Bursa Derivatives exchange had fallen 29 ringgit or 0.73% to 3,919 Ringgit ($924.29) per metric ton.

Anilkumar bagani, the head of research for Mumbai-based Sunvin Group, said that palm oil futures had been trading lower due to profit taking, low energy prices, and weakness in other vegetable oil markets, such as those in China and the U.S.

Dalian's palm oil contract, which is the most active contract in Dalian, fell by 0.91%. Chicago Board of Trade soyoil prices were down by 0.56%.

As palm oil competes to gain a share in the global vegetable oils industry, it tracks price changes of competing edible oils.

The oil prices fell in the early hours of Thursday's trading after an increase in gasoline and diesel stocks in the United States and Saudi Arabia lowering its July crude prices for Asian buyers.

Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.

A survey on Wednesday showed that Malaysian palm oil inventories will rise for the third month in a row in May. This is due to a modest increase in production, despite a robust demand for exports.

India's imports of palm oil in May rose to their highest level for six months, due to lower inventories as well as the discount offered by the tropical oil over rivals soyoil or sunflower oil.

AmSpec Agri Malaysia, an independent inspection company in Malaysia, reported that exports of palm oil products from Malaysia for May increased by 13.2%. Intertek Testing Services, a cargo surveyor and cargo inspector firm based in the United States saw a 17.9% increase.

According to Wang Tao, a technical analyst, palm oil could break support at 3,889 Ringgit per metric tonne and fall to 3,845 Ringgit.

(source: Reuters)