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Malaysian palm oil futures ended their six-week winning streak with a weekly decline, even as they closed higher on Thursday on expectations of lower production and stronger demand from key destinations.
The benchmark palm oil contract for September delivery on Bursa Malaysia Derivatives rose 47 ringgit, or 1.19%, to close at 4,012 ringgit (about $949.36) per tonne. Nonetheless, the contract fell 2.57% for the week. Bursa Malaysia Derivatives will be closed on Friday for a public holiday.
David Ng, a trader at Kuala Lumpur-based Iceberg X Sdn Bhd, said crude palm oil futures rose on expectations that strong production and export performance would continue over the coming weeks.
"We're seeing production growth slow alongside continued strong demand," he added. The Malaysian Palm Oil Board is due to release June supply-and-demand data on 10 July.
The most-active soybean oil contract on the Dalian exchange rose 0.58%, while palm oil there gained 0.43%. On the Chicago Mercantile Exchange, soybean oil prices slipped 0.06%.
Palm oil prices tend to track movements in competing vegetable oils, as it competes for a share of the global vegetable oils market. Oil prices held steady after erasing earlier gains, with investors remaining cautious over the Iran-Israel ceasefire while shifting focus back to market fundamentals. Higher crude oil prices make palm oil a more attractive feedstock for biodiesel production.
Separately, the ringgit, the currency in which palm oil is traded, strengthened 0.21% against the dollar, making the commodity more expensive for buyers holding foreign currencies.
Source: Reuters