KUALA LUMPUR: Malaysian palm oil futures extended early losses on Thursday, weighed down by forecast of improving production in the world’s second-largest producer, while estimates of all-time high U.S soybean output also dampened sentiment.
The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange slid 91 ringgit, or 2.32%, to 3,835 ringgit ($833.70) a metric ton by the midday break.
“We have a mix bag of variables which are bullish and bearish, juxtaposed between both these poles, market will continue to remain uncertain and volatile,” said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari. Malaysian production are showing signs of improvement and the ringgit is strengthening against the dollar, he added.
Top producer Indonesia is planning to set its crude palm oil (CPO) reference price higher at $791.02 per metric ton for July 16-31, senior economic ministry official Musdhalifah Machmud said on Wednesday, making it less competitive against Malaysian palm oil.
In related oils, the US Department of Agriculture said on Wednesday that US farmers will harvest massive crops of both corn and soybeans this year, boosting the supply base despite drought conditions stressing plants during early stages of development.
Dalian’s most-active soyoil contract fell 1.8%, while its palm oil contract eased 1.5%. Soyoil prices on the Chicago Board of Trade ticked up after a 1% overnight loss.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Palm oil may retest a support at 3,874 ringgit per metric ton, a break below which could open the way towards 3,800 ringgit, Reuters technical analyst Wang Tao said.