By Mei Mei Chu
KUALA LUMPUR, Jan 4 (Reuters) – Malaysian palm oil futures on Wednesday slipped from a near five-week high hit in the previous session, though expectations of tightening supplies limited losses.
The benchmark palm oil contract FCPOc3 for March delivery on the Bursa Malaysia Derivatives Exchange lost 50 ringgit, or 1.18%, to 4,203 ringgit ($954.36) a tonne by the midday break.
The contract is tracking an overnight plunge in the U.S. market, but likely lower supplies and fewer exports from Indonesia have reined in losses, a Kuala Lumpur based trader said.
Exports from top producer Indonesia are expected to soften this year after a latest ruling to protect domestic supplies reduced the amount of overseas shipments allowed.
Palm oil production will likely see seasonally weaker output for the first quarter due to shorter working days amid festive seasons and La Nina-induced wet weather conditions, Refinitiv Commodities Research said in a note.
“Looking ahead, palm oil prices in Q1 might point to more upside due to Indonesia’s rising biodiesel mandate and potentially tighter supplies,” Refintiv said.
India’s palm oil imports in December jumped 94% from a year earlier to a record high for the month as higher discount to rival vegetable oils led refiners to increase purchases during the seasonally weak winter period, five dealers said.
Dalian’s most-active soyoil contract DBYcv1 fell 0.3%, while its palm oil contract DCPcv1 slipped 0.1%. Soyoil prices on the Chicago Board of Trade BOcv1 eased after 1.4% overnight loss.
Palm oil may fall to 4,109 ringgit per tonne, as it faces a strong resistance at 4,289 ringgit, Reuters technical analyst Wang Tao said. TECH/C
(Reporting by Mei Mei Chu;editing by Nivedita Bhattacharjee and Vinay Dwivedi)
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