Wednesday, 19 July 2017
KUALA LUMPUR: Malaysian palm oil futures fell to a two-week low in late trade on Tuesday, dropping nearly 1% as the market was weighed down by expectations of rising production.
Palm oil prices were on an uptrend at the start of the month, tracking gains in rival oilseed soy, but then began to weaken last week as production recovered.
The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange was down 0.95% at 2,513 ringgit ($586.60) at the close of trade, its second consecutive day of declines.
It earlier hit an intraday low of 2,508 ringgit, its weakest level since 5 July. Traded volume stood at 33,201 lots of 25 tonnes each on Tuesday evening. A Kuala Lumpur-based futures trader said the market dipped on expectations of an increase in production.
“It looks like supplies are inching higher,” he said. “The market is also factoring in weaker demand.”
While output in June saw an unexpected decline due to lower harvests as workers went on leave during the Muslim fasting month of Ramadan and the Eid-Al-Fitr holidays, production is seen rebounding in July. Production in June fell 8.5% to 1.51 million tonnes from the previous month.
Muslim-majority Malaysia and Indonesia produce nearly 90% of the world’s palm oil supplies. In other related oils, the December soybean oil contract on the Chicago Board of Trade rose 0.7%, while September soybean oil on the Dalian Commodity Exchange was down 0.6%. September palm olein fell 1.9%.
The palm oil October contract may revisit its July 14 low of 2,519 ringgit a tonne, as a correction from the July 11 high of 2,585 ringgit seems to have extended, Reuters market analyst for commodities and energy technicals Wang Tao said.
Source by: Internet