Malaysian palm oil futures fell on Tuesday, ending a three-day winning streak due to concerns over rising palm supplies and on anticipation of stiffer competition from top producer Indonesia. Traders said Indonesia's plans to impose a levy on its exports of crude and processed palm oil could channel demand to Malaysia, which may in turn force Indonesian sellers to reduce their prices to remain attractive.
Indonesia accounts for about 52 percent of world output. "Indonesia will soon lower their prices to compete and the market will need to adjust to that," said a trader with a local commodities brokerage in Malaysia.
The benchmark June contract on the Bursa Malaysia Derivatives exchange had inched down 1.1 percent to 2,208 ringgit ($608) a tonne by Tuesday's close. Total traded volume stood at 40,373 lots of 25 tonnes, above the usual 35,000 lots.
Worries about a strong recovery in crude palm oil production in Malaysia added to the downward pressure on prices, which fell more than 6 percent in March, the worst showing since August 2014.
A Reuters survey of six planters, traders and analysts showed Malaysia's palm stocks likely rose to 1.75 million tonnes in March, their first rise in four months, as higher output in the world's No 2 producer offset export demand.
On the technical front, palm oil may retest resistance at 2,253 ringgit per tonne as its rebound from the March 18 low of 2,128 ringgit has not been completed, according to Reuters market analyst Wang Tao.
In other competing vegetable oil markets, the US soyoil May contract fell 0.3 percent in late Asian trade, while the most active September soybean oil contract on the Dalian Commodity Exchange rose 1.2 percent.
Comments
Comments are closed.