Palm down 2% for second day as stocks rise, soyoil weakens

Malaysian palm oil futures dropped 2% for the second straight session on Wednesday on rising inventories in the world’s second-biggest producer and as they tracked weakersoyoil amid ample supplies.

The benchmark palm oil contract FCPOc3 for September delivery on the Bursa Malaysia Derivatives Exchange was down 83ringgit, or 2.1%, to 3,876 ringgit ($824.15) a metric ton by the midday break, after losing 2% on Tuesday.

“Palm oil stocks have been rising at a time when prices of other edible oils are dropping,” said a Mumbai-based trader.

“This increases difficulties for producers as they cannot reduce stocks without offering discounts to compete with soyoil and sunflower oil.”

Malaysia’s palm oil stocks at the end of June rose 4.35% to 1.83 million metric tons from the previous month, according to data released by the industry regulator after the market closed for the mid-day break.

Crude palm oil production in June declined 5.23% from May to 1.62 million tons, while palm oil exports plunged 12.82% to 1.21 million tons, the Malaysian Palm Oil Board (MPOB) said.

U.S. soyoil futures BOcv1 were down 1% after losing 4% on Tuesday. China’s most active soyoil futures DBYcv1 fell 3% on Wednesday.

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

Palm oil may extend losses to 3,830 ringgit per metric ton, the bottom of a wave (b), according to Reuters’ technical analyst Wang Tao. TECH/C

Soybeans Sv1 slipped 0.42% to $10.75-1/2 a bushel.

The U.S. Department of Agriculture (USDA) on Monday increased the percentage of corn, soy and wheat crops in good-to-excellent condition on Monday. Its ratings were better than analysts expected.

Crude palm oil prices are expected to remain supported by tighter production conditions and strong demand from top buyers India and China, state agency Malaysian Palm Oil Council (MPOC) said.
Source: Reuters (Reporting by Rajendra Jadhav; Editing by Eileen Soreng and Sonia Cheema)