TOKYO/HONG KONG — An expectation of rising palm oil production has pushed down the price of the commodity to an eight-month low.
Palm oil, used in products like margarine and detergent, is mainly produced in tropical Southeast Asian countries, especially in Indonesia and Malaysia.
Production in Malaysia surged 20% from a year ago to 1.46 million tons in March, according to the Malaysian Palm Oil Board.
A dispute between the Southeast Asian producing countries and the second largest palm oil import market, the European Union, has also weighed on the price.
Benchmark Malaysian palm oil futures dropped to around 2,490 ringgit ($566) a ton on Thursday, about a 20% decline from the recent high seen at the end of 2016.
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In related vegetable oils, soybean oil on the Chicago Board of Trade slipped as much as 0.1 percent, while the September soybean oil contract on the Dalian Commodity Exchangeclimbed up to 0.3 percent.
KUALA LUMPUR: Malaysian palm oil futures rose for a second consecutive session on Friday, buoyed by stronger demand ahead of Ramadan and on a technical correction after sharp falls earlier this week.
Palm oil may break a resistance at 2,507 ringgit and gain further to 2,542 ringgit, said a Reuters market analyst for commodities and energy technicals.
Malaysian production rose for the full month of March, up 16.3 percent from February, marking its first monthly gain since September and in line with seasonal trends.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange was up 1 percent, reaching 2,530 ringgit ($575.26) a tonne at the end of the trading day, after earlier hitting a one-week high of 2,535 ringgit.
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oil price revival helps ags. Even palm oil gains
Ags, even palm oil and wheat , started broadly firm on Thursday, although whether they stay that wayIt was a help that oil prices staged some recovery, adding 0.7% to $53.30 a barrel for Brent cride.
For soybeans, sales for 2016-17 are forecast coming in at 300,000-500,000 tonnes, with new crop sales pegged at 100,000-300,000 tonnes.
Palm’s revival came despite data from cargo surveyor ITS showing Malaysia’s exports of the vegetable oil falling 1% month on month as of April 20.
‘Fears of frost damage’It is also a help for palm oil markets that values of canola , an oil-heavy oilseed, and its relative rapeseed are receiving some support from wet conditions in Canada, the top exporter, which are raising some concerns over sowings.
For corn, old crop export sales are expected at 700,000-1.00m tonnes, and new crop at 100,000-300,000 tonnes.