Thursday 28 Mar 2024
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KUALA LUMPUR (March 10): Malaysian palm oil futures fell more than 1.5% on Friday and were headed for a second straight session of declines, tracking weakness in rival oils and on mixed forecasts at an industry conference earlier this week.

Benchmark palm oil futures for May delivery on the Bursa Malaysia Derivatives Exchange were down 1.6% at 2,794 ringgit (US$627.16) a tonne at the midday break. Earlier in the session, they fell to their lowest point since March 1 at 2,790 ringgit.

Palm oil has shed 2.4% so far this week, in what could be its third weekly decline in four. Traded volumes stood at 16,100 lots of 25 tonnes each at noon on Friday.

"Dalian was down and a report from the U.S. Department of Agriculture (out) last night was bearish," said a trader from East Malaysia.
    
U.S. soybean supplies will be bigger than expected at the end of the 2016/17 marketing year as a record harvest in Brazil will flood the global market, cutting into demand for U.S. exports, the government said on Thursday.

"Also after the conference this week, sentiment should not be that friendly."

Leading analysts at an industry conference on Wednesday said present price levels are unsustainable, and while current tight supplies will support the market, prices are seen declining to 2,500 ringgit a tonne around mid-year as production rebounds.

A rebound in output is expected as palm's fresh fruit yields recover from the dry weather effects of an El Nino weather event, which usually damages crops and lowers output.

Malaysia's palm oil stocks at the end of February fell 5.3% from a month earlier to 1.46 million tonnes, the lowest levels in six years, industry regulator Malaysian Palm Oil Board (MPOB) said on Friday. Output levels dipped 1.4% to 1.26 million tonnes.

Palm oil is also impacted by the movements of other related edible oils including soyoil, as they compete for a share in the global vegetable oils market. 

Soybean oil on the Chicago Board of Trade fell 0.5%, while the May soybean oil contract on the Dalian Commodity Exchange dropped 1.8%. 

In other related oils, the May contract for palm olein on the Dalian Commodity Exchange fell 2.2%.

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