Palm oil slips on soyaoil weakness and rising output

Malaysian palm oil futures edged down on Friday, tracking weaker soyaoil prices while softer local demand and worries about rising production also weighed on sentiment. The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange fell 0.5 percent to 2,806 ringgit ($662.73) a tonne. The futures contract ended the week 0.4 percent lower.
Traded volumes were thin, with 29,758 lots of 25 tonnes each at the midday break. "The market has come off its highs on Chicago Board of Trade (CBOT) soyaoil weakness but maintained above the 2,800 ringgit level on bullishness of speakers this afternoon," one trader said, adding that the futures contract is also reacting to poor domestic demand and rising production expectations.
Market players took cues from industry analysts James Fry, Thomas Mielke and Dorab Mistry, who will share their industry and price outlooks at the Indonesian Palm Oil Conference in Bali in the afternoon. Fry said that palm prices could rise to a high of 2,950 ringgit a tonne in January if oil prices rise until the second quarter of the year.
Mistry was also bullish, saying prices are expected to rise to 3,100 ringgit a tonne by January as stockpiles remain lower than expected despite palm being in a high-production cycle. "Soyaoil (price drop) has partly dented today's sentiment on palm, but there are also worries about production," a second Kuala Lumpur-based futures trader said.
The December soyabean oil contract on CBOT fell by 0.49 percent on Friday. In related edible oils, the January soyabean oil contract on the Dalian Commodity Exchange fell by 0.23 percent while the January palm olein contract was down 0.6 percent. Palm oil prices are affected by movements in related oils that compete for a share in the global vegetable oils market.
Support for palm oil could be retested at 2,808 ringgit a tonne, with a good chance of breaking below this level and falling more towards the next support at 2,779 ringgit, Reuters market analyst for commodities and energy technicals Wang Tao said earlier in the day.