KUALA LUMPUR: Malaysian palm oil futures fell on Wednesday, giving up sharp gains in the previous session, due to softer demand and concerns over exports from top producer Indonesia flooding the market.
The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange slid 67 ringgit, or 1.77%, to 3,720 ringgit ($834.45) a tonne by the midday break, down for a fourth session out of five.
Exports of Malaysian palm oil products for July 1-25 fell 2.2% from the same period in June, cargo surveyor Societe Generale de Surveillance said on Tuesday.
A large share of the export market has drifted towards rival and top producer Indonesia, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
“We have demand woes in August with offers from Indonesia largely favourable versus Malaysia and if that continues it is going to be difficult for prices to remain at current levels.”
Palm oil prices will weaken further in the short term due to signs of demand destruction and “distress selling” by top producer Indonesia, commodities consultancy LMC International forecast on Tuesday.
Palm rebounds ahead of Malaysia export figures
Dalian’s most-active soyoil contract fell 0.3%, while its palm oil contract slipped 2.9%. 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 remains neutral in a range of 3,598 ringgit to 3,857 ringgit per tonne, and an escape could suggest a direction, Reuters technical analyst Wang Tao said.
Source: Brecorder
