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Asia Biofuels Update: Palm Oil Down Slightly on Lower Crude Oil, Soybean Oil

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Malaysian palm oil futures were steady to lower on Thursday as crude oil and rival soybean oil weakened, offsetting support from resilient export demand and a softer local currency.

For a second straight session, the Bursa Malaysia Derivatives' September crude palm oil contract inched down by 0.22% to 4,580 Malaysian ringgit ($1,119.61) per metric ton. The October contract was largely unchanged at 4,697 ringgit/mt.

Malaysian ringgit weakened against the US dollar by 0.16% on Thursday, erasing gains from the previous session and making shipments cheaper for foreign buyers.

This could help improve export competitiveness, while Malaysia's export duty remains at 10% through September despite a lowering in reference price, according to a circular from the Malaysian Palm Oil Board.

Shipments for the Aug. 1-10 period have so far risen between 2.6% and 14.8% from a month earlier, according to cargo surveyor estimates. This extends a 7.2% and 14.5% month-over-month export growth in June and July, respectively.

Meanwhile, high inventories in producing regions weighed on prices, particularly as Malaysia's stockpiles reached a five-month high at the end of July.

During the Aug. 1-5 period, the country's palm oil yield per hectare fell 9.3% relative to the same period of the previous month, while total output dropped 8.4%, according to data cited by market intelligence provider SunSirs.

The figures indicate a "contraction in supply, providing support for palm oil spot prices," SunSirs said.

"Key focus areas going forward include developments in the drought severity index and the progress of Indonesia's B50 mandate," price reporting agency MySteel said.

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