Palm oil inches lower

July 12, 2013

Palm oil inches lower
Palm oil

Malaysian palm oil futures inched lower on Thursday on concerns over easing demand, but losses were curbed by data showing inventory had dropped more than expected. Stocks in the world’s No 2 producer fell 9.4 percent to 1.65 million tonnes in June. That exceeded estimates of a 4.2-percent decline and marked the lowest inventory since March 2011.

Those numbers helped offset a bearish outlook for appetite, with cargo surveyor Intertek Testing Services saying Malaysian palm oil exports fell 15.9 percent in the first 10 days of July from a month ago. Another cargo surveyor Societe Generale de Surveillance reported a decline of 16.3 percent. Traders had expected higher shipments on last-minute purchases as buyers stocked up in preparation for the Muslim holy month of Ramazan starting this week.

“The (stocks) news by itself is positive for crude palm oil prices, but we think sentiment may be dampened slightly by the cargo surveyor data,” Alan Lim Seong Chun, an analyst with Malaysia’s Kenanga Investment Bank, wrote in a note. The benchmark September contract on the Bursa Malaysia Derivatives Exchange lost 0.3 percent to close at 2,371 ringgit ($749) per tonne on Thursday. Total traded volume stood at 27,033 lots of 25 tonnes each, below the average 35,000 lots. Prices moved in a range between 2,363 ringgit and 2,388.

Traders said a stronger ringgit has also placed some pressure on palm oil prices, as the ringgit-priced feedstock becomes more expensive for overseas buyers and refiners. The ringgit has gained 1.3 percent so far against the dollar in the past three sessions. In vegetable oil markets, US soyaoil for December gained 0.3 percent in late Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange gained 1.2 percent. Reuters

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