VEGOILS - Chicago palm oil declines, Dalian pressure on oils, and demand concerns

Malaysian palm futures declined on Thursday as they tracked the weakness of Dalian vegetable oils and Chicago soybean oil, while worries about demand amid a strong ringgit also added pressure. The benchmark 'palm' oil contract for April delivery at the Bursa Derivatives Exchange fell 17 ringgit (0.4%), closing at 4,208 Ringgit ($1,066.94).

The stronger ringgit does not help much. Demand is still a concern for the upcoming months, said Paramalingam Supramaniam of Selangor brokerage Pelindung Bestari. The Malaysian Ringgit, the contract currency for trade, reached its highest level since April 2018, on January 28, and has strengthened against U.S. Dollar in recent months. This makes palm more expensive for holders of foreign currencies. The ringgit fell 0.38% on Thursday against the dollar.

Supramaniam said that palm prices will be supported by lower production in February due to the decrease in production expected for January. Dalian's palm oil contract, which is the most active contract in Dalian, lost 1.35% while soyoil prices were down 0.52%. Chicago Board of Trade soyoil prices are down by 0.05%.

As palm oil competes to gain a share in the global vegetable oils industry, it 'tracks' the price movement of other edible oils. A survey shows that Malaysia's palm oils inventories will?end their 10-month streak of rising prices in January as exports increased during a seasonally slowdown in production.

Technical analyst Wang Tao said that palm oil?looks neutral within a range between 4,201-42,254 ringgits per metric tonne, and a breakout could indicate a direction.

(source: Reuters)