July 28, 2014    

Palm oil prices slid ahead of Eid al-Fitr celebrations


Malaysian palm oil futures slid to their lowest in nearly a year last Wednesday, pulled down by a bumper US soybean crop and an uptick in output ahead of Eid al-Fitr.

Palm oil is used to produce specialty fats for the animal feed industry, particularly in the top world producers, Malaysia and Indonesia.

The benchmark October contract on the Bursa Malaysia Derivatives Exchange fell to 2,247 ringgit in late trade, a record since August 12, 2013, before settling at 2,254 ringgit (US$712) per tonne by the day's close. Total volume traded stood at 48,914 lots of 25 tonnes, above the daily average of 35,000 lots.

Some market participants pointed out that the higher output could be due to early harvesting of palm fruit before plantation workers go on holiday for the Eid al-Fitr celebrations.

Also, strength in the Malaysian ringgit, which advanced 0.24% to 3.17 per dollar in late trade also reduced buying interest for ringgit-priced palm oil.

Prospects of rising global oilseed stocks such as a bumper US soybean harvest also weighed on palm. Increased supplies of the competing oilseed for crushing could weaken soyoil prices, which in turn reduce animal feed demand for palm.