VEGOILS - Palm oil drops to a near 3-week low and suffers a second weekly loss

Malaysian palm oil futures fell?to an almost three-week low Friday amid expectations of rising production and increasing?stockpiles. The benchmark palm oil contract for September delivery at the Bursa Derivatives Exchange fell 23 ringgit (0.51%) to 4,483 Ringgit ($1,102.29), its lowest level since June 15. This week, the contract dropped 1.86%. Anilkumar bagani, commodity head at Sunvin Group, says that market participants expect a rise in production, which will contribute to an increase in stocks.

Dalian's palm oil contract lost 1.43% while the most active soyoil contract dropped 0.43%. Chicago Board of Trade will be closed on a holiday.

Palm oil tracks price movements of competing edible oils as it competes to gain a share in the global vegetable oil market. According to a survey, Malaysian palm oil inventories rose to their highest levels ever in June as production surpassed?demand growth.

Bagani added that the prices are being cushioned from a more steep decline by the anticipated tightening of export supplies from Indonesia, due to its mandate for 50% biodiesel blend and talk of a super El Nino. The oil prices were stable and barely changed over the past week, as traders held onto hopes that the U.S.-Iran peace talks in the Middle East would be successful.

Palm oil is a more attractive feedstock for biodiesel due to the stronger crude oil futures.

The palm currency, the ringgit, has been strengthened by 0.25% in relation to the dollar. This makes the product slightly more expensive for foreign currency buyers.

(source: Reuters)