Palm oil trades in a sideways range due to weak export demand and soyoil price pressure

After trading in a narrow range on Tuesday due to weaker soyoil and muted demand for exports, Malaysian palm futures are little changed.

By midday, the benchmark March palm oil contract on Bursa Derivatives Exchange had lost 2 ringgit or 0.05% to 4,336 Ringgit ($962.49 a metric tonne). The contract fell by 0.69% during the previous session.

Crude palm oil fell in the morning session. This was due to lower soybean oil prices during Asian trading hours, as well as a slowdown in exports, according to David Ng, a proprietary traders at Kuala Lumpur based trading firm Iceberg X Sdn. Bhd.

According to Intertek Testing Services, a cargo surveyor and AmSpec Agri Malaysia, an independent inspection company, exports of palm oil products from Malaysia for December decreased between 2.5% and 8.8%.

Dalian's palm oil contract, which is the most active contract in Dalian, fell by 0.44% and soyoil prices dropped by 0.69%. Chicago Board of Trade soyoil prices were down by 0.62%.

As palm oil competes to gain a share in the global vegetable oils industry, it tracks the price changes of competing edible oils.

The oil prices continued to fall for a second consecutive session due to a technical correction following last week's rally. Forecasts of ample supply and an inflated dollar also contributed.

Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.

Palm's trade currency, the ringgit, has firmed by nearly 0.1% against dollars, making it slightly more expensive to buyers who hold foreign currencies.

A survey shows that Malaysian palm oil inventories will likely fall in December. This is the third consecutive month where they have fallen. The reason for this is due to the recent heavy rains which affected harvest.

Technical analyst Wang Tao stated that palm oil could fall between 4,161 and 4,202 ringgits per metric tonne, since it has finished a weak rebound.

(source: Reuters)