Palm Extends Decline on Expectation of Higher Inventories

August 30th, 2017

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Category: Oilseeds

(Reuters) –  Malaysian palm oil futures fell slightly in the morning session on Wednesday, heading for a fourth straight session of decline, on expectations of a rise in inventories.

The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange was down 0.1 percent at 2,710 ringgit ($634.96) at the midday break, after hitting its lowest since Aug. 21 at 2,708 ringgit earlier in the session. It has shed 2.6 percent after touching a five-month high last week.

Traded volumes stood at 16,992 lots of 25 tonnes each at Wednesday noon.

“People are concerned that fundamental is looking bearish. August stocks are expected to come up,” said a trader in Kuala Lumpur.

Palm inventories in August are seen higher as exports are expected to fall from the previous month while production is likely to be higher, the trader said.

Exports of palm oil during Aug. 1-25 fell by 8.1 percent from the same period in the previous month, according to cargo surveyor Intertek Testing Services.

Meanwhile, some traders also sold to consolidate positions ahead of a long weekend in Malaysia.

The Bursa Malaysia Derivatives Exchange market will be closed on Thursday and Friday for public holidays.

The October soybean oil contract on the Chicago Board of Trade was little changed, while January soybean oil on the Dalian Commodity Exchange dropped 0.4 percent.

In related vegetable oils, the January palm olein contract on Dalian declined 0.3 percent.

Palm oil may drop to 2,687 ringgit per tonne, as it has temporarily peaked around a key resistance at 2,759 ringgit, according to Reuters market analyst for commodities and energy technicals Wang Tao.

 

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