KUALA LUMPUR: Malaysian palm oil futures snapped a four-day rising streak on Friday as sluggish export demand and a correction in rival soyoil prices prompted traders to book profits.
The palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange fell 1.1 percent to 2,706 ringgit ($693.49) per tonne at the midday break. Palm oil had risen 3.5 percent in the previous four sessions.
Traded volumes were 14,485 lots of 25 tonnes each.
“Exports demand is not picking up. It seems buyers are waiting for a correction,” said a Kuala Lumpur-based trader.Purchases by palm oil importers, including top buyer India, are running behind schedule, traders said.
Exports of Malaysian palm oil products for April 1-20 rose just 0.9 percent to 724,169 tonnes from 717,670 tonnes shipped during March 1-20, cargo surveyor Societe Generale de Surveillance said earlier this week.
“Underlying trend is bullish considering the expected drop in the production, but right now demand is not supporting further upside,” the trader said.
Palm oil production in Indonesia and Malaysia, the world’s top two producers, is expected to drop in 2016 following hot and dry weather brought on by the El Nino weather pattern.
Malaysian palm oil inventories in March fell below 2 million tonnes for the first time in a year as buyers rushed to purchase the tropical oil before a tax on exports kicked in, offsetting a seasonal jump in output.
Palm oil may retrace to a support at 2,697 ringgit per tonne, as it has failed to break a resistance at 2,744 ringgit, said Wang Tao, Reuters market analyst for commodities and energy technicals.
The September soybean oil contract on the Dalian Commodity Exchange lost 1 percent, while the May Chicago Board of Trade soyoil contract eased 0.4 percent.
