Malaysian palm oil price inches lower on concerns over high inventory

KUALA LUMPUR: Malaysian palm oil futures fell marginally on Thursday as concerns over high inventory levels overshadowed optimism linked to a crude oil price rally.

The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange was down 0.2 percent at 2,002 ringgit ($477.80) per tonne in the first-half session of trading.

Trading volumes stood at 16,228 lots of 25 tonnes each at the midday break.

“The recovery in oil prices led gains in palm but that was quickly pared back due to higher inventory concern,” a Kuala Lumpur-based trader said.

Palm oil prices are influenced by movements in crude oil, as the edible oil is used as feedstock to make biodiesel.

Stocks in Indonesia and Malaysia – top producers of the tropical oil – are expected to rise for the next two months, as demand from key buyers typically slows because palm oil solidifies in winter months.

A break below the support at $1,967 ringgit could confirm the move into a price band formed by a lower channel, while a break above 2,016 ringgit may lead to a gain to 2,060 ringgit, Wang Tao, a Reuters market analyst for commodities and energy technicals, said.

In other related edible oils, the Dalian Commodity Exchange, the January soybean oil contract rose as much as 0.2 percent, but the January palm oil contract was unchanged.

The Chicago December soybean oil contract was untraded due to a holiday. – Reuters