VEGOILS-Palm ends lower on rising production outlook, improving demand underpins
11/07/2023 (Nasdaq), Kuala Lumpur - Malaysian palm oil futures reversed early gains to end lower on Tuesday as traders weighed expectations of rising production against improving export demand.
The benchmark palm oil contract FCPOc3 for September delivery on the Bursa Malaysia Derivatives Exchange closed down 32 ringgit, or 0.82%, to 3,888 ringgit ($835.23) a metric ton.
Exports from Malaysia during the July 1-10 period rose between 18.7% and 26.1%, data from cargo surveyors Amspec Agri and Intertek Testing Services showed.
The Southern Peninsular Palm Oil Millers Association estimated production during July 1-10 rose 5.93% from the same period in June, traders and analysts said.
"We expect inventory levels to remain flat or increase slightly as production is only expected to grow by high single digits in July, with a marginal month-on-month increase in exports," brokerage UOB KayHian said in a note.
Crude palm oil prices would be in an uptrend due to a slower-than-expected peak production season and current weather risk to palm, soybean and other vegetable oils, UOB KayHian.
Malaysia's palm oil inventories at the end of June rose 1.9% to 1.72 million metric tons from the previous month, much smaller than expected, according to the Malaysian Palm Oil Board data.
The condition of U.S. soybean crops improved over the past week after rains in the parched U.S. crop belt, though they remained the worst in more than a decade and spring wheat conditions worsened, the U.S. government data showed on Monday.
Soyoil prices on the Chicago Board of Trade BOcv1 fell 0.7%. Dalian's most-active soyoil contract DBYcv1 rose 0.4%, while its palm oil contract DCPcv1 gained 0.8%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
($1 = 4.6550 ringgit)
Source: Reuters