Palm oil drops on weaker rival oils and a bearish outlook
The price of Malaysian palm futures fell on Thursday after two sessions of gains. This was due to the weakness in other oils and a negative outlook from analysts.
By midday, the benchmark contract for palm oil delivery in May on the Bursa Derivatives Market had fallen 96 ringgit or 2.21% to 4,509 Ringgit ($1,015.31) per metric ton.
Paramalingam Supramaniam is the director of Selangor-based brokerage Pelindung Bestari.
He added that the expectation of a recovery in production during the second half this year increased the pressure on the contract.
Analysts said that a recovery in palm oil production, as well as lower imports from rate-sensitive consumers, will drive down prices in the months to come, even though top producer Indonesia is increasing biodiesel use, they told a Kuala Lumpur conference this week.
He said that heavy rains in East Malaysia are keeping the production low.
Dalian's palm oil contract, which is the most active contract, dropped by 1.09%. Chicago Board of Trade Soyoil Prices fell by 0.22%.
As palm oil competes to gain a share in the global vegetable oils industry, it tracks the price changes of competing edible oils.
According to Intertek Testing Services, the exports of palm oil-based products from Malaysia in the period February 1-25 are expected to fall by 2.7%. However, independent inspection company AmSpec Agri Malaysia estimated exports rose 1.2% month-on-month.
Palm oil is neutral between 4,542 and 4,608 Ringgit per metric tonne, but an escape from this range could indicate a direction.
(source: Reuters)
