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BMD Palm Oil Halts 4 –Day Rally Tracking Weak Soyoil

5 Aug 2020 11:30 am
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Mumbai (Commodities Control) – Malaysian palm oil futures snapped a four-day winning streak on Wednesday, dragged down by lower rival soyoil, but losses were limited by expectations of a plunge in July inventories.

The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange slid 20 ringgit, or 0.72%, to 2,748 ringgit ($654.60) a tonne by the midday break. The contract hover in the range of 2730 and 2769 Ringgit and volume stood at 21,775 lots.

Palm rose as much as 2.82% in the previous session, touching its highest since Feb. 10.

Managed funds are reducing their net long in soybean and soyoil on better soybean crop quality in the U.S. and a record-breaking crop in Brazil, said Marcello Cultrera, institutional sales manager and broker at Phillip Futures in Kuala Lumpur.

Brazilian soy production will hit a record 132.6 million tonnes next season, as demand from China remains strong and farmers intend to expand acreage, according to a forecast from agribusiness consultancy StoneX on Tuesday.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

Dalian's most-active soyoil contract fell 1.52%, while its palm oil contract was down 0.14%. Soyoil prices on the Chicago Board of Trade were also trading 0.39% lower.

"Palm oil exports estimates for shipments from Malaysia over August 1-5 show around a 20% contraction month-on-month," Cultrera said.

Supporting prices is a survey pegging Malaysia's end-July palm oil inventories nosediving 11.94% from June to three-year lows, as exports grew and production slumped due to a worsening labour shortage.

(Commodities Control Bureau)

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