Wednesday, 29 July 2015 13:45
JAKARTA: Malaysian palm oil futures rebounded on Wednesday following gains overnight in US soy oil, snapping five sessions of declines, although concerns over the outlook for Chinese demand reversed most of the early gains.
“(Palm oil) prices were pulled up a little bit because yesterday the Chicago Board of Trade soybean oil prices were higher,” said a trader with a foreign commodities brokerage in Kuala Lumpur.
“It was more of a profit-taking morning than actual buying (while) looking at a better picture, (and) that’s why the market came off,” the trader added, noting he expected prices to decline further in the afternoon session.
By the midday break, benchmark palm oil for October on the Bursa Malaysia Derivatives Exchange had gained 0.19 percent to 2,135 ringgit ($ 559.93) a tonne. On Tuesday, the contract hit 2,115 ringgit, its lowest since April 30.
Total traded volume on Wednesday stood at 22,631 lots of 25 tonnes each, well above the roughly 13,500 lots usually traded by midday.
Recent turmoil in Chinese stock markets would impact demand for palm oil, the trader said, referring to one of the world’s top importers of the edible oil.
“There are people who are also involved in the palm oil trade whose money is being eroded there.”
With declining exports from Malaysia in July expected to outweigh declines in production over the Muslim holiday period, Malaysian Palm Oil Board closing stocks and production data due out on August 10 could show excess stocks, the trader said.
“The market is depressed here trying to get a foothold for new demand.”
In competing markets, oil prices fell in Asian trade on Wednesday as concerns over global oversupply outweighed the impact of a likely larger than expected draw in US crude stocks and a weakening dollar.
The US soyoil contract for August slipped 0.59 percent in morning Asian trade, reversing a 1.8 percent gain overnight.
Meanwhile, the most active January soybean oil contract on the Dalian Commodity Exchange edged up 0.77 percent snapping a four-day selloff, and Dalian RBD palm oil for September delivery gained 1.15 percent.
