KUALA LUMPUR: Malaysian palm oil futures slipped on Wednesday on anticipation of higher global supply as top producer Indonesia prepares to resume exports of the commodity.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange slid 10 ringgit, or 0.16%, to 6,294 ringgit ($1,434.69) a tonne by the midday break, down for a third in four sessions.
“Traders are focused on increasing global supply as Indonesia gears up to enter the export market and as both countries go into seasonal high output,” said Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics.
Prices will continue to face downward pressure although demand is seen improving as China gradually opens up, Varqa added.
Palm oil may test resistance at 6,423 ringgit
Traders are concerned over a slower recovery in Malaysia’s production after Indonesia on Tuesday cancelled a plan to send its citizens to work in palm oil plantations in the world’s second largest producer, which has faced a labour shortage.
India has slashed the base import prices of crude and refined palm oil, while raising the price of crude soyoil, the government said in a statement late on Tuesday.
Indonesia set crude palm oil reference price at $1,700.12 per tonne for June, senior official at coordinating ministry of economic affairs, Musdhalifah Machmud, said on Tuesday, up from May’s $1,657.39 a tonne.
Dalian’s most-active soyoil contract fell 0.4%, while its palm oil contract rose 0.03%.
Soyoil prices on the Chicago Board of Trade were down 0.3%.
Palm oil looks neutral in a range of 6,220 ringgit to 6,423 ringgit per tonne, and an escape could suggest a direction, Reuters technical analyst Wang Tao said.
Source: Brecorder
