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Palm oil dips after hitting 7-week high in early trade

Palm oil dips after hitting 7-week high in early tradeKUALA LUMPUR: Malaysian palm oil futures dipped slightly by the middday break on Friday, after hitting a seven-week high earlier in the session on sustained buying by traders despite data showing higher production and inventory levels.

The benchmark November palm oil contract on the Bursa Malaysia Derivatives Exchange was down 0.05 percent at 2,156 ringgit ($ 499.54) a tonne by the break, after touching 2,169 ringgit, its highest since July 24.

Traded volume stood at 12,466 lots of 25 tonnes each, slightly below the average 13,500 lots usually traded at the end of the morning session.

Data from the Malaysian Palm Oil Board (MPOB) showing a 13 percent rise in production and 10 percent increase in August stockpiles, had little impact.

“There’s some good buying interest still in the market… with low production coming into play in November and December,” said a Kuala Lumpur-based trader, who said the MPOB data had minimal impact on palm prices on Friday.

“The demand will be there as palm is fairly cheap now compared with other vegetable oils.”

In competing vegetable oil markets, the most active January soybean oil contract on the Dalian Commodity Exchange was up nearly 0.6 percent. The US December soyoil contract was 0.15 percent higher.

Crude oil prices dipped on Friday due to a strong dollar and Saudi Arabia’s dismissal of a producer summit, causing a slight fall despite a strong rally in the previous session.

Palm oil often takes price direction from crude oil, as vegetable oils are increasingly used in making renewable fuels.

Copyright Reuters, 2015

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