Palm oil drops for third day on concern of larger Indonesian exports

Malaysian palm oil futures fell on Tuesday for a third straight session on concerns that Indonesia’s plan to increase export quota would hurt demand.

The benchmark palm oil contract FCPOc3 for September delivery on the Bursa Malaysia Derivatives Exchange fell 1.13% to 4,301 ringgit ($973.96) per tonne during early trade. It extended a 7.6% loses posted on Monday.

FUNDAMENTALS
* Indonesia proposed raising palm oil export quotas and is considering increasing mandatory levels of biodiesel in fuel mixes to prop prices for farmers at a time when domestic palm oil inventories are high, a senior minister said.

* Meanwhile, Dalian’s most-active soyoil contract DBYv1 fell 2.76%, while its palm oil contract DCPv1 slipped 2.56%.

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

* Brent crude futures extended gains on Tuesday as a strike in Norway is expected to disrupt oil and gas output, fanning tight supply worries.

* Stronger crude futures make palm a more attractive option for biodiesel feedstock.

* Palm oil may retest a support at 4,267 ringgit per tonne, a break below which could open the way towards 3,900-4,090 ringgit range, Reuters technical analyst Wang Tao said.

MARKET NEWS
* Asian shares rose on Tuesday morning as Japan reported positive economic data, while oil prices continued its Monday increase on tight supply.

DATA/EVENTS (GMT)

0145 China Caixin Services PMI June

0430 Australia RBA Cash Rate July

0500 India S&P Global Svcs PMI June

0750 France S&P Global Svcs, Comp PMIs June

0755 Germany S&P Global Svcs PMI June

0755 Germany S&P Global Comp Final PMI June

0800 EU S&P Global Svcs, Comp Final PMIs June

0830 UK Reserve Assets Total June
Source: Reuters (Reporting by Fransiska Nangoy; Editing by Arun Koyyur)