Palm trades lower and is set to suffer a second weekly loss

The Malaysian palm futures contract reversed its morning gains as it sought new directions. It is now heading towards a second weekly loss.

By midday, the benchmark June palm-oil contract traded on the Bursa Derivatives Exchange in Malaysia had fallen 27 ringgit or 0.64% to 4,173 Ringgit ($941.14) per metric ton.

This week, the contract has fallen by 3.58%.

A Kuala Lumpur trader stated that the futures are consolidating after recent falls before plotting a different direction based upon this month's data on exports and production.

Data from the industry regulator on Thursday showed that Malaysian palm oil stocks rose for the first time in six months as production recovered, and imports increased sharply to offset strong festive demand.

Stocks at the end March increased by 3.52% compared to the previous month, reaching 1.56 million metric tonnes.

AmSpec Agri Malaysia, an independent inspection company, reported that exports of Malaysian products containing palm oil for the period April 1 to 10 increased by 52.8%, to 301.113 metric tonnes. According to Intertek Testing Services, it grew 29.3%, to 323,160 tons.

Dalian's palm oil contract, which is the most active contract, gained 0.97% while soyoil prices increased by 0.97%. The Chicago Board of Trade's (CBOT) soyoil price rose 0.02%.

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

The oil prices remained unchanged on Friday, and are expected to fall for a second consecutive week due to fears that an extended trade war between China and the United States will slow economic growth and reduce crude consumption.

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

The palm ringgit's currency has strengthened by 0.67% against U.S. dollars, increasing the price of the commodity for buyers who hold foreign currencies.

(source: Reuters)