Malaysian palm oil futures ended lower on Friday after weaker-than-expected export data fanned concerns that demand for the tropical oil has begun to taper, while a stronger ringgit following the Malaysian budget announcement curbed buying. Cargo surveyor Intertek Testing Services said that shipments of Malaysian palm oil fell 0.6 percent to 1,231,393 tonnes in the October 1-25 period, as a lull in exports to India offset a slight increase to China and Europe.
Another cargo surveyor Societe Generale de Surveillance showed exports rise 3.8 percent for the same period. But losses were capped by expectations that output in Malaysia, the world's No 2 producer, has slowed and would help keep stocks under 2 million tonnes despite dwindling exports. "The market is bracing for further selling given the expectation that demand is tapering," said a trader with a local commodities brokerage in Kuala Lumpur.
The Malaysian ringgit rose 0.6 percent to 3.1425 against the dollar on Friday after Prime Minister Najib Razak said the government will impose a new consumption tax. A stronger ringgit makes palm feedstocks more expensive for overseas buyers. By Friday's close, the benchmark January contract on the Bursa Malaysia Derivatives Exchange had eased 0.8 percent to 2,444 ringgit ($777) per tonne, chaffing away at weekly prices which posted a small gain of 1.8 percent.
Total traded volume stood at 30,546 lots of 25 tonnes each, lower than the usual 35,000 lots. Investors are wary as measures the 6 percent goods and services tax (GST) which will be implemented in April 2015 could eat into local consumption demand. Malaysia is set to impose a requirement for biodiesel to use 7 percent palm oil, up from 5 percent now, as a way of whittling down palm oil stocks and cushioning prices in the face of growing competition from other edible oils. In competing vegetable oil markets, the US soyoil contract for December fell 0.1 percent in late Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange dropped 0.8 percent.
Comments
Comments are closed.