JAKARTA: Malaysian palm oil futures fell on Thursday, continuing their decline for an eighth session and hitting their lowest since September, although strong Indian buying and short covering helped erase some early losses.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange lost 1 ringgit, or 0.03%, to 3,727 ringgit ($874.27) a metric ton by the midday break.
“The futures opened lower but quickly found some floor on the back of Indian buying and short covering after a significant decline in recent times,” said Anilkumar Bagani, research head of Mumbai-based vegetable oil broker Sunvin Group.
India has been at the forefront to buy palm oil due to its lucrative prices in comparison to rival oils, mainly soyoil, he added. Dalian’s most-active soyoil contract fell 0.13%, while its palm oil contract shed 0.63%. Soyoil prices on the Chicago Board of Trade were up 0.49%.
Palm oil tracks price movements of rival edible oils as it competes for a share of the global vegetable oils market.
Malaysian palm oil futures are likely to extend their decline and trade near a two-year low of 3,500 ringgit from June to November as recovery in production leads to a stock build, industry analyst Dorab Mistry said on Wednesday.
Oil rose on the day, supported by hopes of a breakthrough in looming US-China trade talks. Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
The ringgit, palm’s currency of trade, weakened 0.71% against the US dollar, making the commodity cheaper for buyers holding foreign currencies.
Palm oil may test support at 3,702 ringgit, a break below which could open the way towards the 3,638-3,662 ringgit range, according to Reuters’ technical analyst Wang Tao.
