Palm oil dips on weaker crude and Malaysian production outlook
Analysts expect robust production from the South-east Asian country for June
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[KUALA LUMPUR] Palm oil edged lower, weighed down by declining crude prices and expectations for strong output from the second-biggest grower, Malaysia.
Futures in Kuala Lumpur dipped 0.2 per cent to trade near RM4,545 (US$1,113.53) a tonne, erasing the previous session’s gain.
Crude oil fell for a third day, as shipments from the Persian Gulf accelerated, reducing the appeal of biofuels.
David Ng, a senior trader at trading company IcebergX, said: “The overriding short-term concern in the market right now is the weakness in the energy market, with oil flowing through the Strait of Hormuz.
“Expectations of rising output in the coming weeks is also pressuring prices in the near term.”
The palm-oil market did not have a major reaction to Indonesia’s gradual roll-out of its expanded biofuel mandate this week – which means lower exports from the top grower – as it is factoring in “incremental demand”, he added.
Analysts expected robust Malaysian production for June, while at least one cargo surveyor said exports jumped an estimated 12 per cent on the previous month.
The increase in overseas shipments was due to rising seasonal demand and restocking activity in major buyers India and China, Ng said. BLOOMBERG
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