KUALA LUMPUR: Malaysian palm oil futures eased on Tuesday, snapping a five-day winning streak, as export demand from top buyer India eased during the day and expectations of an increasing stockpile weighed on sentiment.
The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange closed down 30 ringgit, or 0.77%, at 3,850 ringgit ($926.82) a tonne.
The contract had earlier rose to an intraday high of 2.5% and hit a near 4-week peak.
India has purchased 170,000 tonnes of Malaysian crude palm oil and Indonesian palm oil since Thursday, but demand subsided at current price levels with some hedging leading to prices retracing lower, said Marcello Cultrera, institutional sales manager & broker at Phillip Futures in Kuala Lumpur.
Indian buyers have resumed purchases of refined palm oil after a one-year gap as New Delhi removed restrictions on imports and reduced import taxes last week.
Cultrera warned it was unrealistic for prices to hit the record highs it saw in May due to Indonesia’s fast rising supply and its widening discount over Malaysian palm oil. “As import and processing margins at destinations are eroding slowly, Indonesian crude and refined palm oil are now trading at a $8.5 and $10 discount against Malaysia’s products,” Cultrera added.
The Malaysian Palm Oil Association estimated crude palm oil production in June rose 1.6% from the month before to 1.59 million tonnes, traders said.
A Reuters survey on Monday had pegged June production at 1.68 million tonnes. Dalian’s most-active soyaoil contract gained 0.7%, and its palm oil contract rose 1.8%. The Chicago Board of Trade was closed for a public holiday.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Comments
Comments are closed.