Palm slips on weaker rival edible oils, profit taking

Malaysian palm oil futures extended losses on Thursday, snapping a two-session rally, tracking weaker rival edible oils at Chicago and Dalian markets, as well as profit taking actions.

The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange lost RM29, or 0.73 per cent, to RM3,919 (US$924.29) a metric ton by the midday break.

“The palm oil futures were seen trading lower on profit taking, energy prices and weaknesses in related China and US vegetable oil markets,” said Anilkumar Bagani, head of research at Mumbai-based vegetable oil broker Sunvin Group.

Dalian’s most-active soyoil contract fell 0.29 per cent, while its palm oil contract declined 0.91 per cent. Soyoil prices on the Chicago Board of Trade were down 0.56 per cent.

Palm oil tracks price movements of rival edible oils, as it competes for a share of the global vegetable oils market.

Oil prices slipped in early trade on Thursday after a build in US gasoline and diesel inventories and Saudi Arabia’s cut to its July prices for Asian crude buyers.

Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.

Malaysia’s palm oil inventories are projected to climb for a third consecutive month in May, driven by a modest recovery in production despite robust export demand, a Reuters survey showed on Wednesday.

India’s palm oil imports in May surged to a six-month high, as lower inventories and the tropical oil’s discount to rival soyoil and sunflower oil prompted refiners to increase purchases.

Independent inspection company AmSpec Agri Malaysia said exports of Malaysian palm oil products for May rose 13.2 per cent, while cargo surveyor Intertek Testing Services saw a 17.9 per cent jump.

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