KUALA LUMPUR: Malaysian palm oil futures fell on Thursday after two consecutive sessions of gains, weighed down by weakness in Dalian vegetable oils, although lower production estimates limited losses.
The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange slid 30 ringgit, or 0.80%, to 3,740 ringgit ($812.16) at closing.
The contract was seen trading lower following weakness in Chinese vegetable oil futures and Malaysia’s weaker palm oil performance during December, said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
“Although lower production estimates have restricted palm oil prices from falling at a bigger magnitude,” Bagani said. The Malaysian Palm Oil Association estimated Malaysia’s palm oil production fell 8.59% between Dec. 1-Dec. 20, while UOB’s Kay Hian estimated production was down 7% to 11%. Dalian’s most-active soyoil contract fell 0.23%, while its palm oil contract slipped 0.22%. Soyoil prices on the Chicago Board of Trade were up 0.02%. Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Exports of Malaysian palm oil products from Dec. 1-Dec. 25 were estimated to be down between 4% and 16% from the previous month, according to data from surveyors Intertek Testing Services and AmSpec Agri Malaysia.
The ringgit rose 0.48% against the dollar, making the commodity more expensive for buyers holding foreign currency. Oil prices fell roughly 1% on Thursday, as concerns eased about shipping disruptions along the Red Sea route, even as tensions in the Middle East continue to fester.
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock. Malaysia maintained its January export tax for crude palm oil at 8% and raised its reference price.—Reuters
Source: Brecorder
