Friday, 27 March 2015 10:15
JAKARTA: Malaysian palm oil futures fell on Friday, tracking oil prices which reversed after a rally on Thursday due to conflict concerns in the Middle East.
“The cause of this morning’s drop is that the crude oil rally halted and eased from yesterday’s highs,” said a trader with a local commodities brokerage based in Kuala Lumpur.
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Brent prices shot up nearly 6 percent on Thursday, but then fell more than $ 1 on Friday as traders estimated that the threat of a disruption to world crude supplies from the Saudi Arabia-led air strikes in Yemen was low.
Worries about oversupply also dragged on prices.
“The bigger picture is that palm stock is expected to rise fast in coming months. Supply is good. Demand is uncertain” the trader added.
Strong supply without matching demand can lead to an over-abundance of palm oil in the market and drive down prices.
The Malaysian Palm Oil Association, a group of growers, estimates that the country’s crude palm oil production climbed 16.8 percent in the March 1-20 period, as yields in the flood-hit Borneo region recovered.
By the midday break, the benchmark June contract on the Bursa Malaysia Derivatives had edged down 1.41 percent to 2,161 ringgit ($ 590) a tonne, reversing two days of gains.
Total traded volume stood at 15,692 lots of 25 tonnes, above the average 12,500 lots.
In competing vegetable oil markets, the US soyoil May contract fell 0.64 percent in early Asian trade, while the most active September soybean oil contract on the Dalian Commodity Exchange lost 0.62 percent.
Copyright Reuters, 2015
