Palm ends two-day gain on demand concerns, higher production outlook
- Dalian's most-active soyoil contract gained 0.6%, while its palm oil contract rose 0.3%. Soyoil prices on the Chicago Board of Trade fell 0.6%.
KUALA LUMPUR: Malaysian palm oil futures slipped 1% on Wednesday, as traders booked profit after two days of sharp gains, while demand concerns and expectations of higher production further weighed on the market.
The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange fell 44 ringgit, or 1.12%, to 3,886 ringgit ($941.60) a tonne by the midday break, snapping two sessions of sharp gains.
"The market is jittery, there is a demand concerns with such high prices," said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
March production is likely to increase between 25% and 30%, and the market is also expecting double-digit growth in April, he said.
"At these high prices, players would rather book their profits and wait to see whether there demand will rise again after the Eid festival," Paramalingam added.
The ringgit, palm's currency of trade, fell 0.2% against the dollar, making the commodity cheaper for holders of foreign currency.
Oil prices edged higher as investors looked for bargains following the previous day's plunge, making palm a more attractive option for biodiesel feedstock.
Dalian's most-active soyoil contract gained 0.6%, while its palm oil contract rose 0.3%. Soyoil prices on the Chicago Board of Trade fell 0.6%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Palm oil may drop to 3,798 ringgit per tonne, as it may have completed a bounce from 3,667 ringgit, Reuters technical analyst Wang Tao said.
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