Palm oil prices snap two-day rally on forecast of higher May stockpile, lower crude

Palm had climbed 2.5% in the previous two sessions to hit its highest closing level in two months.

Getty Images

The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange slid 36 ringgit, or 1.5%, to 2,363 ringgit ($552.75) a tonne by the midday break.

KUALA LUMPUR: Malaysian palm oil futures declined on Thursday after two days of sharp gains, on expectations of a jump in May inventories and tracking losses in crude and rival soyoil.

The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange slid 36 ringgit, or 1.5%, to 2,363 ringgit ($552.75) a tonne by the midday break.

Palm had climbed 2.5% in the previous two sessions to hit its highest closing level in two months.


May output in Malaysia, the world's second largest producer, likely rose 3% from the month before, while inventories possibly surged 12% month-on-month to 2.28 million tonnes, according to a forecast by CGS-CIMB Research.

"The concerns over rising stocks are partially offset by expectations that India will raise its purchase of palm oil in June to replenish stocks," said Ivy Ng, regional head of plantations research at CGS-CIMB Research, said in a note.

"Indonesia's move to raise export levy by US$5 per tonne to support the biodiesel mandate has boosted confidence that the B30 mandate will be carried out," she added.
ADVERTISEMENT

Oil prices fell, reversing gains in the previous session, on concerns that supply will rise if major producers are unable to agree to extend the depth of output cuts that have supported recent gains.

Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.

Dalian's most-active soyoil contract fell 0.92%, while its palm oil contract dropped 0.04%. Soyoil prices on the Chicago Board of Trade were also down 1.08%.

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

Palm oil may peak around its April 9 high of 2,409 ringgit per tonne, as suggested by its wave pattern, Reuters technical analyst Wang Tao said.
ADVERTISEMENT
READ MORE

READ MORE:

LOGIN & CLAIM

50 TIMESPOINTS

More from our Partners

Loading next story
Text Size:AAA
Success
This article has been saved

*

+