SINGAPORE: Malaysian palm oil futures extended losses to a second consecutive session on Thursday, weighed down by weaker rival edible oils and higher production in key palm producing countries.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange was down 92 ringgit, or 2.33%, at 3,850 ringgit ($805.27) a metric ton by the midday break, recovering slightly from an intraday low of 3,817 ringgit.
Rising production and losses in related vegetable oils futures on the Chinese exchanges are dragging down Malaysian palm, said Sathia Varqa, a senior analyst at Fastmarkets Palm Oil Analytics.
Dalian’s most-active soyoil contract fell 1.2%, while its palm oil contract lost 2.45%. Soyoil prices on the Chicago Board of Trade shed 0.42%.
Weakness in soft oils, especially soyoil, has forced palm oil prices to ease, said Anilkumar Bagani, research head at Mumbai-based vegetable oil broker Sunvin Group.
Soybean prices weakened amid ongoing planting in the U.S. Midwest, pushing soyoil prices lower.
Palm oil higher on hotter weather, stronger rivals
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Malaysia’s meteorological agency reduced issuances of Level 1 hot weather alerts to less than 20 areas on Wednesday evening. Hot weather negatively affects palm yields.
Meanwhile, members of Malaysia’s Programme Advisory Committee discussed initiatives and methods to improve crop materials and efficient farm management to boost yields, Malaysia-based Bernama reported on Wednesday.
The Malaysian ringgit, palm’s currency of trade, weakened 0.13% against the dollar.
Palm oil may retest resistance at 4,012 ringgit per ton, as a bounce from Monday’s low of 3,880 ringgit looks incomplete, said Reuters technical analyst Wang Tao.
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