Palm oil exports slip on the back of weak Malaysian data
Malaysian palm futures fell on Tuesday, trading in ranges as weak exports for the month to date overshadowed a drop in stockpiles.
By midday, the benchmark palm oil contract on Bursa Derivatives Exchange for July delivery was down 5 Ringgit or 0.13% at 3,703 Ringgit ($833.07 a metric tonne).
The contract was heading for a second session of decline.
Malaysian Palm Oil Board said Monday that the country's palm oils stocks dropped in July, for the first month in four months. This was due to the fact that exports grew faster than production.
MPOB reported that July inventories dropped 5.35% from the previous months to 1.73 millions metric tons, the lowest level since March.
Mitesh Saiya is the trading manager of Mumbai-based Kantilal, Laxmichand and Co. He said that August exports are lower than usual, which could help to increase inventories in the month.
He said that the shrinking price differential between palm oil and soyoil is pushing up demand for palm.
Data from Intertek Testing Services & AmSpec Agri Malaysia showed that exports of palm oil products from Malaysia between Aug. 1-10 were down 12.2% to 17.7% compared to a month ago.
Dalian's soyoil contract with the highest volume fell 2.5% while palm oil contracts dropped 2.02%. Chicago Board of Trade soyoil prices fell by 0.96%.
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.
Crude oil prices fell, ending a five-day winning streak, as the markets refocused their attention on demand concerns after OPEC cut its demand forecast for 2024 because of softer expectations in China.
Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.
The Malaysian Ringgit, the palm oil industry's currency, has depreciated by 0.31% in relation to the dollar. Palm oil becomes more appealing to foreign currency holders when the ringgit is weaker.
The contract stabilised around a strong support zone between 3,671 and 3,704 rings, according to technical analyst Wang Tao.
(source: Reuters)
