Malaysian palm oil futures stretched their winning streak into a third day on Wednesday, as the ringgit fell and as investors expected output to drop this month, although a fall in crude oil prices hampered gains. Planters and traders said palm oil output in the world’s second biggest producer Malaysia may ease in October as wet weather delays harvesting and crimps oil extraction rates from fresh fruit, indicating that production growth could have already peaked in August.
“The market is drudging along with mixed sentiments. The bullish factors are the weaker ringgit, lower output, and weather vagaries in November and December,” said a trader with a local commodities brokerage in Malaysia. But worries of bigger competition from the huge US and South American soybean crop alongside “anaemic” food and fuel demand during the northern hemisphere winter weighed on the tropical oil. The benchmark December contract on the Bursa Malaysia Derivatives Exchange had edged up 0.8 percent to 2,197 ringgit ($671) per tonne by the day’s close. Total traded volume stood at 45,039 lots of 25 tonnes each, higher than the average 35,000 lots. Technicals showed palm oil is expected to test resistance at 2,224 ringgit per tonne, with a good chance of breaking above this level and rising more to 2,262 ringgit, said Reuters market analyst Wang Tao.
Official data on stocks, output and exports for end-September will be released by industry regulator the Malaysian Palm Oil Board (MPOB) on Friday. A Reuters poll had showed palm oil stocks in Malaysia expected to hold at 2.05 million tonnes at end-September, as a removal of export taxes failed to boost shipments as much as initially expected.
The survey estimated that crude palm oil production in September fell 8 percent to 1.87 million tonnes, weakening after August’s surge of 22 percent to 2.03 million tonnes. Palm oil output may continue to fall in October due to wet weather, industry players said. The Malaysian Meteorological Department said the current “inter-monsoon season”, marked by frequent thunderstorms in the afternoon, will likely carry on until early or mid-November before the wetter north-east monsoon unfurls. The US soyoil contract for December shed 0.3 percent in late Asian trade. The most active January soybean oil contract on the Dalian Commodities Exchange was nearly flat after reopening from the one-week National Day holiday.
Source : Business Recorder