Palm Oil Prices Edge Higher, But Post Second Weekly Loss

Malaysian palm oil futures closed higher on Friday, supported by a weaker ringgit and a US decision to cut tariffs on Malaysian goods, though the contract still posted a second consecutive weekly loss.

The benchmark palm oil contract for October delivery on Bursa Malaysia Derivatives rose 15 ringgit, or 0.35%, to close at 4,245 ringgit ($992.98) a tonne.

Anilkumar Bagani, head of research at Sunvin Group, said a recovery in South American soybean oil prices and a weaker ringgit helped offset early losses, while the US decision to cut tariffs on Malaysian goods from 25% to 19% eased the market's downward pressure.

Meanwhile, Paramalingam Supramaniam, director of brokerage Pelindung Bestari, said the market was awaiting July production and export data, noting that the figures would give a clearer picture of the market's direction.

"For Malaysia, we're seeing July production come in better than expected, but exports remain very weak, and we expect end-of-month stocks to rise above 2.1 million tonnes," Supramaniam added.

Palm oil fell on weakness in competing vegetable oils, higher output and slowing demand

Cargo surveyors estimated that palm oil exports fell by between 6.7% and 9.6% in July.

The Malaysian Palm Oil Board is expected to release its July supply and demand data on 11 August.

On China's Dalian Commodity Exchange, the most active soybean oil contract rose 0.83%, while palm oil fell 0.02%. On the Chicago Mercantile Exchange, soybean oil prices dropped 0.47%.

Palm oil prices tend to track movements in other competing vegetable oils, as they compete for a share of the global market.

The ringgit, the currency used in palm oil trade, weakened 0.35% against the US dollar, making the commodity cheaper for buyers holding foreign currencies.

Meanwhile, global oil prices were largely steady and headed for a weekly gain, as investors weighed the impact of additional tariffs and sanctions imposed by US President Donald Trump.

Weaker crude oil futures reduce palm oil's appeal as a feedstock for biodiesel production.

Source: Reuters