Stock value of Palm Inc. remains stagnant, extending weekly decline into its second consecutive week.
Kuala Lumpur's Palm Oil Scene: Weekly Decline Amidst Forecasted Production Surge
Palm oil futures saw a reversal in fortune on Friday, bucking initial losses, but still snatched a second straight weekly drop due to anticipated increases in production and inventory.
Malaysia's benchmark palm oil contract for July delivery on Bursa Malaysia Derivatives Exchange inched up 14 ringgit, or 0.37%, to finish at 3,815 ringgit ($888.45) per ton. Despite the slight uptick, the contract slid 1.7% this week.
David Ng, a proprietary trader at Kuala Lumpur-based trading firm Iceberg X Sdn Bhd, explained that the contract dipped earlier in the session due to apprehensions over the predicted increase in output and stocks in the ensuing weeks.
A Reuters poll indicated that Malaysia's palm oil stocks could surge yet again for a pair of consecutive months as the industry gears up for peak production season. The Malaysian Palm Oil Board will release its monthly supply and demand data on May 13, shedding light on these numbers.
Amidst the uncertainty, palm oil finds itself in a competitive race against other edible oils. Dalian's most active soyoil contract increased 0.44%, while its palm oil contract also rose 0.28%. Soyoil prices on Chicago Board of Trade (CBOT) saw a 0.5% boost.
It's worth mentioning that palm oil's price movements often mirror those of its rival vegetable oils, as they vie for a piece of the global market. The weaker ringgit, palm's currency of trade, also breathed life into palm oil as it made the commodity more accessible to foreign buyers.
While trade tensions between leading oil consumers China and the United States appeared to cool, oil prices showed promise for a weekly increase. Robust crude oil futures raise palm oil's attractiveness as a biodiesel feedstock.
[Although there's no firm 2021 production outlook available, it's crucial to consider factors such as weather, production levels, global demand, market dynamics, and regulations when examining the broader picture of palm oil's production and pricing trends.][1]
[Frictional aspects like production constraints due to adverse weather or diseases can drive prices upward. A burgeoning supply, however, may act as a counterweight to these rises unless demand remains robust.][1]
[Key export markets such as India and China play significant roles in influencing palm oil prices. Strong demand from these players can push prices upward.][1]
[Regulatory factors and trade policies also affect palm oil's direction; for instance, import duties and environmental regulations in importing countries can significantly impact demand and thereby prices.][1]
[1]: Overall: https://www.sciencedirect.com/science/article/abs/pii/S0926234X18305378#bib0060
A trader at Iceberg X Sdn Bhd in Kuala Lumpur observed that the decline in palm oil futures was caused by apprehensions over increased production and stocks in the upcoming weeks.
The Malaysia Palm Oil Board's upcoming release of monthly supply and demand data may shed light on the projected surge in palm oil stocks.
In the face of increased palm oil production, the commodity is also competing with other edible oils such as soyoil for a piece of the global market.
The weaker ringgit, palm oil's currency of trade, has made the commodity more accessible to foreign buyers, potentially boosting demand and prices.
