Crude palm oil futures ended up 1.3 per cent yesterday, easing off 7-week highs hit earlier as weaker crude oil weighed on production concerns in a top palm oil growing region in the Southeast Asian country.
Investors skimmed off some profits on concerns that the rally, which has added some 6.5 per cent so far this week, was overdone.
The benchmark October contract on Bursa Malaysia’s Derivatives Exchange hit a session high of RM2,357, a level unseen since June 18, but settled at RM2,333.
“Crude oil is leading sentiment lower because of concerns of global demand led by the US and it affects vegetable oils because of the biofuel story,” said a trader with a local commodities brokerage.
The palm oil market initially spiked up as much as 2.3 per cent in what traders called a “knee-jerk reaction” to Sabah plantations seeing up to a 15 per cent drop in output due to biological oil palm tree stress.
Traders said expectations of tight supplies come as more palm oil product deals are expected in less than three weeks leading up to the Asian festival, starting with Ramadan and ending with China’s mid-Autumn festival in early October.
Ramadan, the Muslim holy month where fasts in the day are followed by feasts in the evening, will see most of the plantation workers in top producers Indonesia and Malaysia taking holidays and spur orders from overseas Muslim buyers.
The US crude oil eased below US$71 (US$1 = RM3.52), worsening sentiment for vegetable oils like soyaoil and rapeseed, which are increasingly channelled into the biofuel sector in Europe and South America.]]>