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Palm oil snaps three-day rally as crude oil declines

Palm oil snaps three-day rally as crude oil declines

KUALA LUMPUR: Malaysian palm oil reversed early gains to end lower on Monday, snapping a three-day rally, as crude oil prices fell but better than expected July 1-10 exports capped losses.

The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange closed down 28 ringgit, or 0.72%, at 3, 864 ringgit ($922.42) a tonne, after rising as much as 1.8% earlier.

Crude futures fell as concerns over slowing global growth outweighed the prospect of tightening supply, making palm a less attractive option for biodiesel feedstock.

Exports of Malaysian palm oil products for July 1-10 rose 2%-4% from a month ago, cargo surveyors said on Saturday, beating market expectations of a decline.

Stockpiles expanded to a nine-month high of 1.61 million tonnes at end-June, as rising production and imports offset a sharp rebound in exports, Malaysian Palm Oil Board (MPOB) data showed.

Production gained 2.2% from May while exports jumped 11.8%, which was within market expectations.

“MPOB data is neutral for the market and now attention is turned to the July production and export numbers, ” said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.

But investors will mostly look at external markets, particularly soy and canola oils for price action trend, he added.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

Dalian’s most-active soyoil contract rose 1.4%, while its palm oil contract jumped 1.6%. Soyoil prices on the Chicago Board of Trade were up 0.8%.

Palm oil prices in top buyer India have risen more than 6% despite the government cutting import tax and allowing refined palm oil shipments as prices jumped overseas on strong demand hopes, industry officials said.

China raised its forecast on imports of edible oils in 2020/21 marketing year, on increase of palm oil and sunflower oil shipments.

($1 = 4.1890 ringgit)- Reuters

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