Malaysian palm oil futures dropped on Friday, their first session of losses in three, as they tracked weaker rival oils on the Chicago Board of Trade (CBOT) and China's Dalian Commodity Exchange. Also weighing on sentiment were forecasts for higher output in Indonesia, the world's top producer of palm. Benchmark palm oil futures for February delivery on the Bursa Malaysia Derivatives Exchange were down 0.2 percent at 2,869 ringgit ($649.98) a tonne at the end of the trading day. They have declined 3.5 percent this week after gaining 8.7 percent in the previous week.
Traded volumes stood at 39,182 lots of 25 tonnes each, below the 2015 daily average of 44,600 lots. Palm was tracking weaker rival oils, said one trader from Kuala Lumpur. Another based in East Malaysia said the market fell due to higher production forecasts in Indonesia and "lacklustre exports" from Malaysia.
Indonesia's crude palm oil output likely rose for a sixth month in October, increasing by 5.6 percent to 3.06 million tonnes, according to a Reuters poll of three industry associations and a state palm research firm. Malaysian shipments of palm oil declined in the first half of November by 17-19 percent from the same period a month ago, according to data from cargo surveyors.
Palm prices track the performance of related vegetable oils such as oilseed soya, as they compete for a share in the global edible oils market. The December soyabean oil contract on the CBOT fell 0.2 percent, while the January soyabean oil contract on the Dalian Commodity Exchange declined 0.2 percent. In related vegetable oils, the January contract for palm olein on the Dalian Commodity Exchange was down 0.2 percent. Palm oil looks neutral in a range of 2,823-2,891 ringgit per tonne, according to Reuters market analyst for commodities and energy technicals Wang Tao.
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