Palm oil eases on higher supply prospects; strong demand limits
24/07/2024 (Business Recorder), Beijing - Malaysian palm oil futures ticked down for a second session on Wednesday as prospects of higher output in the world’s second largest producer outweighed strong demand.
The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange slid 14 ringgit, or 0.35%, to 3,955 ringgit ($846.71) a ton by the midday break.
The market is anticipating higher production in July after a miller association’s data showed output in southern Peninsular Malaysia during July 1-20 rose 17.8% compared to the same period last month, analysts said.
India bought a record amount of edible oils for July delivery, as refiners increased palm oil and soyoil purchases due to lucrative prices and ahead of an anticipated hike in import duties, industry and government sources told Reuters.
July edible oil imports by the world’s biggest buyer is expected to jump 26% from a month ago to a record 1.92 million tons. This will help reduce inventories in top producer Indonesia and Malaysia as well as support prices.
Malaysian palm oil surrenders early gains
Top palm oil producer Indonesia is planning for the widespread use of the palm-oil based B40 biodiesel in 2025, replacing the current B35 blending, the energy ministry said in a statement.
Dalian’s most-active soyoil contract fell 0.03%, while its palm oil contract fell 0.9%. Soyoil prices on the Chicago Board of Trade were down 1.2%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Falling U.S. crude inventories caused oil prices to rebound on Wednesday after several days of decline, while expectations for a nearing ceasefire deal in the Middle East kept prices from continuing to climb.
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
Palm oil may retest support at 3,947 ringgit per metric ton, as it could have completed a bounce around resistance at 4,024 ringgit, Reuters technical analyst Wang Tao said.