KUALA LUMPUR (June 22): Malaysian palm oil futures slid today after an industry analyst forecast the tropical commodity’s global consumption will drop, while uncertainty over production further dented sentiment.
The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange slid 0.85% to RM2,451 a tonne during the midday break.
The contract fell as much as 1.7% earlier in the session as traders reacted to leading analyst Thomas Mielke’s comments in an online seminar.
Mielke said that for the first time ever, world consumption of palm oil will decline this season due to the impact of the Covid-19 pandemic.
Traders were also cautious ahead of the June 1 to June 20 production data from the Southern Peninsular Palm Oil Millers Association.
Investor sentiment, however, recovered on expectations that June demand remained firm, a trader in Kuala Lumpur said.
Malaysian palm oil exports in June 1 to June 20 rose between 55.3% and 57%, according to cargo surveyors.
In the same seminar, the Malaysian Palm Oil Council (MPOC) said palm oil prices are projected to average RM2,337 per tonne this year, while the Malaysian Palm Oil Board (MPOB) forecast prices at RM2,500.
The MPOB also said current rebounding prices are expected to be sustained for the rest of the year, supported by the resumption of a biodiesel programme.
Last Friday, the contract hit a three-month closing high and recorded a sixth straight weekly gain.
Dalian’s most-active soyoil contract rose 0.49% and its palm oil contract gained 1.26%. Soyoil prices on the Chicago Board of Trade fell 0.35%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oil market.
Palm oil may break resistance at RM2,479 per tonne, and rise into the range of RM2,536 to RM2,592, Reuters technical analyst Wang Tao said.
Source : The Edge Markets