Palm oil exports flatten as crude prices rise, despite weaker competitor oils.

Malaysian palm futures were trading within a narrow band on Wednesday, after reaching their lowest level in over seven months. Investors weighed tighter stocks and higher crude oil prices with weaker export data and competing Dalian contracts.

By midday, the benchmark palm oil contract on Bursa Malaysia's Derivatives exchange for October delivery was unchanged at 3,693 Ringgit ($834.95) per metric ton.

The currency fell to its lowest intraday level of 3,638 Ringgit earlier in the session, its lowest since January 9.

Malaysian Palm Oil Board reported on Monday that inventories had dropped to a 4-month low during July. Analysts and traders are expecting a slower demand in the next peak harvest season to help recover stocks.

On Wednesday, oil prices rose on the back of estimates of shrinking U.S. crude inventories and gasoline. The market was also watching for an escalation of the Middle Eastern conflict that could reduce global oil supplies.

Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.

According to estimates released by the cargo surveyor Societe générale de surveillance on Tuesday, Malaysian palm oil exported for August 1-10 dropped 13.2% compared to a previous month.

Dalian's palm oil contract fell 1.4%, while the most active soyoil contract declined 1.9%. After two days of declining prices, soyoil on the Chicago Board of Trade was up 0.9%.

As they compete to gain a share of the global vegetable oil market, palm oil is affected as well by changes in prices in other oils.

The Malaysian Ringgit, the palm oil's trade currency, has strengthened by 0.47% versus the dollar. Palm oil becomes less appealing to foreign currency holders when the ringgit strengthens.

Technical analyst Wang Tao said that a bullish target range for palm oil of 3,784 to 3,819 Ringgit per ton was abandoned, as the contract looks set to break support at 3,571 ringgit.

(source: Reuters)