Palm oil futures fall on production increase outlook, lacklustre demand
JAKARTA: Malaysian palm oil futures extended losses on Wednesday, continuing their decline for the seventh straight session, on worries about an increase in palm production and lacklustre demand from major consumer countries.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange lost RM38, or 1 per cent, to RM3,754 (US$886.63) a metric ton by the midday break. "With increasing palm production, the US government policies for biofuels and lacklustre demand from major consuming countries, palm prices have taken a fast dip," said Sandeep Singh, director of The Farm Trade, a Kuala Lumpur-based consulting and trading company.
These are now good levels for consumers to come in, and prices are expected to recover from these levels before they fall again in the third quarter, he added.
Dalian's most-active soyoil contract rose 0.44 per cent, while its palm oil contract shed 0.95 per cent. Soyoil prices on the Chicago Board of Trade were up 1.65 per cent.
Palm oil tracks the price movements of rival edible oils as it competes for a share of the global vegetable oils market.
Oil prices rose on Wednesday, holding slightly above recent four-year lows, as investors focused on US-China trade talks and signs of lower US production.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
The ringgit, the palm's currency of trade, slightly weakened 0.09 per cent against the US dollar, making the commodity cheaper for buyers holding foreign currencies.
Palm oil may fall to RM3,702 per metric ton, driven by a wave, according to Reuters' technical analyst Wang Tao.
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