KUALA LUMPUR: Malaysian palm oil futures gave up early gains on Tuesday, as traders weighed forecasts of rising production against strong demand from top buyer India ahead of a key festival there.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange had fallen 33 ringgit, or 0.89%, to 3,667 ringgit ($805.58) a tonne by the midday break, after rising 1.5% in early trade.
The contract has declined nearly 6% in the past four sessions. The market is trading both sides with a weaker ringgit and expectations of higher September exports lifting the market in early deals, a Kuala Lumpur-based trader said.
But a lack of follow-through buying at higher prices encouraged some traders to book profits, she added. Malaysia’s palm production is expected to increase in September, though labour shortages and higher exports may limit the rise, Refinitiv Commodities Research said in a note late on Monday.
Indonesian palm oil producers are whittling down their hefty inventory overhang with discounts versus rivals and aggressive sales to India, where demand is picking up for next month’s Diwali festival, industry officials said.
Dalian’s most-active soyoil contract fell 1.5%, while its palm oil contract plunged 2.8%.
Palm oil reverses early gains
Soyoil prices on the Chicago Board of Trade were down 0.2%. Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Palm oil may break a support of 3,646 ringgit per tonne, and fall into 3,481-3,583 ringgit range, Reuters technical analyst Wang Tao said.