Palm prices rise on concerns about lower production and demand
The price of Malaysian palm oils futures rose for the second session in a row on Thursday. This was due to expectations of a decrease in production. However, a lack demand from major importing countries restricted gains.
At midday, the benchmark palm oil contract on Bursa Derivatives Exchange for April delivery gained 31 ringgit or 0.72% to 4,365 Ringgit ($986.44) per metric ton.
Paramalingam Supramaniam is the director of Selangor brokerage Pelindung Bestari. He said that production concerns continue, and Malaysian output will likely decline by 13%-15% this February due to floods and rains in the country.
Paramalingam also expressed concern about the lack of demand in key markets.
"For the prices to remain at this level, there must be a stronger buying interest. This is not currently seen. It's still not much of the festive season. "I think the prices will remain rangebound until we get the next MPOB figures."
On February 10, the Malaysian Palm Oil Board is expected to release their monthly supply and Demand data.
Dalian's palm oil contract, which is the most active contract in Dalian, rose 1.31% and soyoil contracts gained 1.58%. Chicago Board of Trade soyoil prices rose 0.49%.
As palm oil competes to gain a share in the global vegetable oil market, it tracks the price fluctuations of competing edible oils.
Early Asian trading saw oil prices rise, following a sharp increase in March oil prices by Saudi Arabia's oil company.
The palm ringgit's currency has weakened by 0.16% compared to the U.S. Dollar, making it cheaper for foreign buyers.
A survey shows that Malaysian palm oil inventories in January likely fell to their lowest level in almost two years, due to adverse weather conditions disrupting production. However, lower exports partially offset the decline.
Technical analyst Wang Tao stated that palm oil could retest its support level of 4,265 Ringgit per ton as the correction from a high of 4,415 Ringgit on February 3 looks incomplete.
(source: Reuters)
