(July 2): Palm oil edged lower, weighed down by declining crude prices and expectations for strong output from the second-biggest grower, Malaysia.
Futures in Kuala Lumpur dipped 0.2% to trade near RM4,545 ($1,436.18) per tonne, erasing the previous session’s gain. Crude oil fell for a third day as shipments from the Persian Gulf accelerated, reducing the appeal of biofuels.
“The overriding short-term concern in the market right now is the weakness in the energy market with oil flowing through the Strait of Hormuz,” said David Ng, a senior trader at IcebergX Sdn Bhd. “Expectations of rising output in the coming weeks is also pressuring prices in the near term.”
The palm oil market didn’t see a major reaction to Indonesia’s gradual rollout of its expanded biofuel mandate this week — which means lower exports from the top grower — as it’s factoring in “incremental demand”, he added.
Analysts are expecting robust Malaysian production for June, while at least one cargo surveyor says exports jumped an estimated 12% on the previous month. The increase in overseas shipments was due to rising seasonal demand and restocking activity in major buyers India and China, Ng said.
Prices:
See also: EU adds palm oil for drugs, soy seeds to deforestation carve-out
- Palm for September delivery on Bursa Malaysia Derivatives was at RM4,547/tonne at the midday break after falling as much as 0.5% earlier
- Soybean oil for December in Chicago rose 0.2% to 65.54c/lb
- Refined palm oil for September on Dalian Commodity Exchange fell 0.5% to 9,224 yuan ($1,758.02)/tonne
- Dalian soybean oil for September rose 0.2% to 8,447 yuan/tonne
- Soybean oil’s premium over palm was at about US$332 ($429.96)/tonne versus an average of about US$226 in the past year, according to data compiled by Bloomberg
- Palm’s premium over gasoil was about US$181/tonne versus an average of about US$220 in the past year, according to data compiled by Bloomberg
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