KUALA LUMPUR: Malaysian palm oil futures recouped early losses on Monday to trade almost flat, with concerns of lower January output and a weaker ringgit countering weakness in rival edible oils.
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange slid 2 ringgit, or 0.05%, to 3,762 ringgit ($791.33) by the midday break.
The contract opened the day lower following Chicago Board of Trade (CBOT) soyoil and Chinese vegetable oil futures.
However, it was seen erasing the early losses quickly as preliminary estimates showed a decline in Malaysian palm oil stocks amid a near double-digit fall in production and plummeting exports in January, said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
“We estimate that the stocks are expected to show a decline of 6% as production is estimated to have fallen by 9%, while exports performed poorly by declining 9.3% from December,” Bagani said.
Dalian’s most-active soyoil contract fell 0.7%, while its palm oil contract lost 0.31%.
Palm oil extends losses amid weaker rival oils, soft Chinese data; up 2% in Jan
CBOT soyoil prices were down 0.07%. Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
The ringgit, palm’s currency of trade, fell 0.84% against the dollar, making the commodity less expensive for buyers holding the foreign currency.
Independent cargo surveyors Intertek Testing Services and AmSpec Agri Malaysia estimated that Malaysian palm oil product exports for January fell 6.7% and 9.4%, respectively, from the previous month.
Cargo surveyor Societe Generale de Surveillance estimated exports of Malaysian palm oil products in January at 1.17 million tons, up 0.19 million tonnes from December, according to LSEG data.
Oil prices stabilised in early Asian trading after sharp falls last week, amid continued attempts to reach a ceasefire in the Israel-Palestinian conflict even as the US planned new strikes on Iran-backed groups.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
Palm oil may fall towards 3,708 ringgit per ton, as it seems to have broken support of 3,771 ringgit, Reuters technical analyst Wang Tao said.
Source: Brecorder
