Palm oil drops on Dalian losses and profit taking action
Malaysian palm futures declined on Monday due to profit-taking and a decline in the Dalian palm contract.
By midday, the benchmark palm oil contract on Bursa Malaysia's Derivatives exchange was down 38 Ringgit or 0.96% to 3,939 Ringgit ($909.49) per metric ton.
A Kuala Lumpur based trader stated that "the benchmark is experiencing a correction due to profit-taking after recent rally and following Dalian palm oil decline".
Dalian's palm oil contract, which is the most active contract in soyoil, fell by 1.27%. Chicago Board of Trade will be closed on a holiday.
As they compete to gain a share of the global vegetable oil market, palm oil monitors price movements for related oils.
According to Amspec Agri, Malaysian palm oil exports in August totaled 1,376,412 tons.
Intertek Testing Services, a cargo surveyor, said that the exports of palm oil products from Malaysia for August dropped 9.9% from 1,604,578 tons in July to 1,445,442 tons.
Indonesia increased its crude palm oil reference price (CPO) for September from $820.11 per metric ton in August to $839.53, according to a Friday trade ministry regulation.
The traders are also cautious as India, a major importer, is considering an increase in import taxes on vegetable oils. This could impact demand for palm oil.
The Malaysian Ringgit, the palm oil industry's currency, fell 0.28% in value against the US dollar. Palm oil becomes more appealing to foreign currency holders when the ringgit is weaker.
The oil prices continued to fall on Monday, as OPEC+ is expected to increase production in October. Meanwhile, signs of sluggish consumption in China and the U.S. - the two world's largest oil consumers - raised concerns over future growth.
Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.
According to Wang Tao, technical analyst, palm oil could test resistance at 4,023 Ringgit per metric tonne. A break above this level would open the door to 4,122 Ringgit.
(source: Reuters)
