June 22, 2020 / 5:24 AM / 21 days ago

VEGOILS-Palm oil falls on projected drop in consumption

(Updates with midday prices, quotes)

By Mei Mei Chu

KUALA LUMPUR, June 22 (Reuters) - Malaysian palm oil futures slid on Monday after an industry analyst forecast the tropical commodity’s global consumption will drop, while uncertainty over production further dented sentiment.

The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange slid 0.85%, to 2,451 ringgit ($573.87) a tonne, during the midday break.

The contract fell as much as 1.7% earlier in the session as traders reacted to leading analyst Thomas Mielke’s comments in an online seminar.

Mielke said that for the first time ever, world consumption of palm oil will decline this season due to the impact of the COVID-19 pandemic.

Traders were also cautious ahead of the June 1-20 production data by the Southern Peninsular Palm Oil Millers Association.

Investor sentiment, however, recovered on expectation that June demand remains firm, a trader in Kuala Lumpur said.

Malaysian palm oil exports in June 1-20 rose between 55.3% and 57%, according to cargo surveyors.

In the same seminar, the Malaysian Palm Oil Council said palm oil prices are projected to average 2,337 ringgit per tonne this year, while the Malaysian Palm Oil Board (MPOB) forecast prices at 2,500 ringgit.

MPOB also said current rebounding prices are expected to sustain for the rest of the year, supported by resumption of a biodiesel programme.

Last Friday, the contract had hit a three-month closing high and recorded a sixth straight weekly gain.

Dalian’s most-active soyoil contract rose 0.49% and its palm oil contract gained 1.26%. Soyoil prices on the Chicago Board of Trade fell 0.35%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

Palm oil may break a resistance at 2,479 ringgit per tonne, and rise into a range of 2,536-2,592 ringgit, Reuters technical analyst Wang Tao said. ($1 = 4.2710 ringgit) (Reporting by Mei Mei Chu; Additional reporting by Liz Lee; editing by Uttaresh.V and Krishna Chandra Eluri)

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