Palm oil surrenders early gains on weaker rival contracts

Malaysian palm oil futures gave up early gains on Wednesday to extend losses to a third session, as weaker rivals Dalian and Chicago contracts weighed on the market.

The benchmark palm oil contract FCPOc3 for October delivery on the Bursa Malaysia Derivatives Exchange closed 9 ringgit, or 0.24% lower at 3,696 ringgit ($822.80) a metric ton. The contract gained 0.51% earlier in the session.

Malaysian palm oil futures had recovered with a double-digit upside after seeing some weakness in the ringgit currency, a Kuala Lumpur-based trader said.

The ringgit MYR=, palm’s currency of trade, weakened 0.49%against the dollar, making the commodity less expensive for buyers holding foreign currencies.

Dalian’s most-active soyoil contract DBYcv1 fell 1.07%, while its palm oil contract DCPcv1 lost 1.74%. Soyoil prices on the Chicago Board of Trade BOcv1 were down 0.33%.

Palm oil tracks the price movements of rival edible oils as they compete for a share of the global vegetable oils market.

Brent crude futures LCOc1 gained 1.14%to $77.35 a barrel by 1007GMT. Stronger crude oil futures make palm a more attractive option for biodiesel feedstock. O/R

Palm oil inventories in Malaysia are expected to drop in July for the first time after rising for three consecutive months.

Industry regulator the Malaysian Palm Oil Board is scheduled to release its monthly palm oil data on Aug. 12.

Tags: futures, benchmark contract, soyoil, Malaysia, palm oil