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Short covering lifts palm, market still bearish due to trade concerns

Short covering lifts palm, market still bearish due to trade concerns

KUALA LUMPUR: Malaysian palm oil futures reversed early losses to end higher on Thursday due to short covering, though traders said market sentiment was still bearish on trade and currency concerns.

The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange was up 0.3 percent at 2,222 ringgit ($542) a tonne at the end of the trading day.

Trading volumes totalled 45,547 lots of 25 tonnes.

“We’re seeing some short covering, though the market is still bearish on trade concerns,” said a Kuala Lumpur-based trader, referring to the ongoing US-China trade dispute, adding though that China seeking negotiations with the US could ease jitters.

China said on Thursday it would hold a fresh round of trade talks with the United States in Washington later this month, offering hope for progress in resolving a conflict that has set world markets on edge.

Traders, however, are still concerned that palm oil exports will be affected by sliding emerging market currencies, as reduced purchasing power cuts into imports into countries like Turkey and India.

Malaysia’s palm oil shipments in the first half of August fell from a month earlier, cargo surveyor data showed. Inspection company AmSpec Agri Malaysia reported a 14.6 percent decline and Societe Generale de Surveillance an 11.1 percent fall.

In other related oils, the Chicago December soybean oil contract rose 0.6 percent, while the January soybean oil contract on China’s Dalian Commodity Exchange fell 0.8 percent.

The Dalian January palm oil contract slipped 0.9 percent.

Palm oil prices are affected by movements of other edible oils, as they compete for a share in the global vegetable oils market.

Copyright Reuters, 2018

Source: Brecorder

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