Palm oil snaps three-day winning streak on weak rival oils, profit taking
29.01.2024 (Business Recorder) - SINGAPORE: Malaysian palm oil futures snapped a three-day rally on Monday, due to weakness in rival oils and on profit taking.
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange fell 68 ringgit, or 1.69%, to 3,949 ringgit ($834.53) a metric ton at closing.
The contract rose nearly 2% last week, its third straight week-on-week increase.
Dalian’s most-active soyoil contract fell 2.48%, while its palm oil contract fell 1.49%. Soyoil prices on the Chicago Board of Trade dropped 0.92%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Oil prices dipped on Monday as China’s ailing property sector took another hit while a drone attack on U.S. forces in Jordan added to supply disruption concerns in the Middle East and Houthi militants stepped up attacks on vessels in the Red Sea.
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
Palm prices have succumbed to mild profit taking on Monday after weeks of rallying, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
“We are yet to see recovery in production. Thus, prices will remain supportive. Plantations and private millers are witnessing a double-digit drop in production,” he added.
The scenario will remain the same in February, coupled with the long spell of holidays during Chinese New Year, Paramalingam said.
Top palm producer Indonesia’s meteorological agency issued warnings of heavy rain and strong winds in some of its palm oil-producing states, including Sumatra and Kalimantan, during Jan. 29-31.
Cargo surveyor Societe Generale de Surveillance estimates exports of Malaysian palm oil products for Jan. 1-25 at 919,139 metric tons, according to LSEG.
The Malaysian ringgit, palm’s currency of trade, weakened 0.15% against the dollar. A weaker ringgit makes palm oil more attractive for foreign currency holders.