Malaysian palm oil futures fell on Thursday as rival soybean oil declined, and as a firmer local currency and high inventories dampened strong export demand sentiment.
The Bursa Malaysia Derivatives' September crude palm oil contract slipped 0.52% to 4,622 Malaysian ringgit ($1,128.69) per metric ton. The October contract lost 0.53% to 4,677 ringgit/mt, ending two sessions of gains.
Malaysian ringgit firmed against the US dollar by almost 0.1% on Thursday, erasing the previous session's losses and increasing export prices for foreign buyers. Export attractiveness could dampen if the local currency sustains its strength.
High domestic stocks, which a Reuters survey estimated to have reached a five-month high in July, also weighed on prices.
Inventories rose 7.4% month over month as higher production offset export growth, which cargo surveyors reportedly estimated to be between 12.1% and 19.5%. A Reuters survey also showed a 14.8% rise.
Traders also remained on the sidelines while waiting for the Malaysian Palm Oil Board's July industry data, due on Aug. 10.
In Indonesia, July exports dropped year over year to 2.4 million metric tons from 2.7 mmt, based on statistics bureau data. Total H1 volumes still remained higher from a year earlier, although a potential decline in shipments as a higher 50% biodiesel blending progresses will likely reverse the trend.
In the near term, "prices are likely to maintain a mildly bearish rangebound trend," according to price reporting agency MySteel.
Nonetheless, palm oil prices are expected to find support from tightening supply conditions in H2 and resilient demand, New Straits Times reported, citing Hong Leong Investment Bank.
HLIB reportedly projects that earnings of plantation companies will rise by 3% to 8% for every 100 ringgit/mt increase in prices.