Palm rises but clocks weekly 9.6% slump on rising supply outlook

Malaysian palm oil futures jumped more than 2% on Friday tracking Chicago soyoil, but the contract logged its first weekly loss in three on expectations of rising supplies.

The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange gained 79 ringgit, or 2.07%, to 3,900 ringgit ($875.62) a tonne.

For the week, the contract fell 9.6%.

Malaysia’s palm oil inventories at end-July likely jumped to an eight-month high due to improving production and soaring imports, a Reuters survey showed on Thursday.

But production worries due to workers shortages are raising concerns about the quality of the processed crude palm oil and yields are on the decline, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.

The Malaysian Palm Oil Board is scheduled to release its data next week.

Exports from Malaysia during Aug. 1-5 rose 24.5% from the same week in July, cargo surveyor Intertek Testing Services said.

Traders are expecting higher overseas shipments from Indonesia after the country lowered its crude palm oil export duty reference price for Aug. 1-15, making its products more competitive than Malaysian palm oil.

Dalian’s most-active soyoil contract fell 0.9%, while its palm oil contract DCPcv1 gained 2.6%. Soyoil prices on the Chicago Board of Trade BOcv1 were up 0.9%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Source: Reuters (Reporting by Mei Mei Chu; Editing by Subhranshu Sahu, Rashmi Aich and Shailesh Kuber)