Palm drops as trade conflict overrides bullish data

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KUALA LUMPUR (May 10): Malaysian palm oil futures fell more than 1% by Friday's close, having touched a five-month low, as concern over the U.S.-China trade conflict outweighed data showing easing stockpiles and production.

The Benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange settled 1.1% lower on Friday evening at 1,983 ringgit (US$477.03). It earlier fell to 1,970 ringgit, its weakest since Nov 30.

Palm prices are also down 1.3% for the week in a third straight weekly decline.

"The market is still down on the U.S.-China trade war concerns, despite the Malaysian Palm Oil Board data," said one Kuala Lumpur futures trader, referring to industry regulator data released earlier in the day. 

The data showed that April stock levels fell 6.6% to a sixth-month low of 2.73 million tonnes, while output declined to 1.65 million tonnes, down 1.4% from March. Exports rose 2% to 1.65 million tonnes.

A Reuters survey had forecast palm oil's end-April stockpiles to fall 5% to 2.77 million tonnes, while production was forecast to ease by 1.9% to 1.64 million tonnes. Exports were expected to firm by 1.6% to 1.64 million tonnes.

Meanwhile, Malaysian palm oil exports for May 1-10 rose by between 6.4% and 14.4% from the same period in April, according to data on Friday from cargo surveyors Intertek Testing Services, Amspec Agri Malaysia and Societe Generale de Surveillance.

The United States escalated its tariff war with China on Friday by increasing levies to 25% for US$200 billion worth of Chinese goods in the midst of last-ditch talks to rescue a trade deal.

In related oils, the Chicago July soybean oil contract was last up 0.2% on Friday, with the May soyoil contract on the Dalian Commodity Exchange down 1.1%. 

The Dalian May palm oil contract slipped by 0.1%.

Palm oil prices are affected by movements in soyoil, with which it competes for global market share.
                      
 Palm, soy and crude oil prices at 1046 GMT

Contract Month Last Change Low High Volume
MY PALM OIL MAY9 1943 +10.00 1943 1950 75
MY PALM OIL JUN9 1953 -16.00 1950 1980 1949
MY PALM OIL JUL9 1984 -22.00 1981 2019 19139
CHINA PALM OLEIN MAY9 4150 -4.00 4134 4150 136
CHINA SOYOIL MAY9 5250 -60.00 5242 5260 120
CBOT SOY OIL JUL9 26.68 +0.05 26.59 26.8 9137
INDIA PALM OIL MAY9 519.30 +0.10 518.70 521.5 416
INDIA SOYOIL MAY9 741.95 +1.70 740.7 742.8 2240
NYMEX CRUDE JUN9 62.05 +0.35 61.53 62.49 224929

 Palm oil prices in Malaysian ringgit per tonne
 CBOT soy oil in U.S. cents per pound
 Dalian soy oil and RBD palm olein in Chinese yuan per tonne
 India soy oil in Indian rupee per 10 kg
 Crude in U.S. dollars per barrel
 
(US$1 = 4.1570 ringgit)
(US$1 = 69.8399 Indian rupees)
(US$1 = 6.8164 Chinese yuan)