Palm Oil Notches Seventh Weekly Gain Despite Friday Slip

Malaysian palm oil futures closed lower on Friday, weighed down by weaker prices for rival vegetable oils on the Chicago and Dalian exchanges, along with profit-taking. Even so, the contract managed to post its seventh weekly gain in eight weeks.

The benchmark palm oil contract for September delivery on Bursa Malaysia Derivatives fell by 29 ringgit, or 0.71%, to close at 4,062 ringgit (US$963.02) per tonne. For the week, the contract gained 1.27%.

David Ng, a trader at Kuala Lumpur-based Iceberg X Sdn Bhd, said:

"Crude palm oil prices retreated in line with weaker soybean oil and palm oil prices on the Dalian exchange."

He added:

"Profit-taking following the recent rally also weighed on the market."

• The most-active soybean oil contract on the Dalian exchange fell by 0.95%, while its palm oil contract slipped 0.07%.
• On the Chicago exchange, soybean oil prices dropped by 0.96%.

Palm oil is influenced by movements in rival vegetable oil prices as it competes with them for a share of the global market.

Pressure From Crude Oil and US Oils

Crude oil futures edged lower after Iran reaffirmed its commitment to non-proliferation, while OPEC+ nations prepare this week to agree on a production increase.

Lower crude oil prices make palm oil less attractive as a feedstock for biodiesel production.

Currency and Stockpile Effects

• The Malaysian ringgit, the currency in which palm oil is traded, strengthened by 0.05% against the US dollar, making the commodity slightly more expensive for buyers holding foreign currencies.
• A Reuters survey showed that Malaysia's palm oil stocks fell in June for the first time in four months, due to an unexpected drop in production, while export demand remained strong.

Source: Reuters