Palm rises on expectations of lower output, strong demand
KUALA LUMPUR: Malaysian palm oil futures inched higher on Thursday, as anticipation of lower output and strong demand from key destinations supported the market.
The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange gained RM18, or 0.45 per cent, to RM3,983 (US$943.39) a metric ton at the midday break. The contract fell 3.9 per cent in the previous two sessions.
Crude palm oil futures traded higher on the expectation that production and export would remain bullish in the coming weeks, said David Ng, a proprietary trader at Kuala Lumpur-based trading firm Iceberg X Sdn Bhd.
"We see production pace slowing down and robust demand going forward," he added.
The Malaysian Palm Oil Board is expected to release its June supply and demand data on July 10.
Dalian's most-active soyoil contract rose 0.38 per cent, while its palm oil contract added 0.1 per cent. Soyoil prices on the Chicago Board of Trade were down 0.27 per cent.
Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market.
The Bursa Malaysia Derivatives Exchange palm oil contract will be closed on Friday for a public holiday.
Crude oil prices inched higher, extending gains from the previous day as a larger-than-expected draw in U.S. crude stocks signalled firm demand, while investors remained cautious about the Iran-Israel ceasefire and stability in the Middle East.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
The ringgit, palm's currency of trade, strengthened 0.31 per cent against the dollar, making the commodity more expensive for buyers holding foreign currencies.
Cargo surveyors estimated that exports of Malaysian palm oil products for June 1-25 rose between 6.6 per cent and 6.8 per cent, compared with the same period a month ago.
Malaysia has lowered its July crude palm oil reference price, a change that decreases the export duty to 8.5 per cent, a circular on the Malaysian Palm Oil Board website showed.
Palm oil may retest support of RM3,978 per ton, with a good chance of breaking it and falling towards RM3,938, Reuters technical analyst Wang Tao said.
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