June 18, 2020 / 5:37 AM / 2 months ago

VEGOILS-Palm reverses gains on concerns over new virus cases, production

(Add midday prices, trader comments)

SINGAPORE, June 18 (Reuters) - Malaysian palm oil futures traded lower on Thursday, reversing two straight sessions of gains, as fears of another wave of coronavirus infections and expectations of higher production clouded the outlook.

The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange traded 0.1% lower at 2,358 ringgit($551.84) a tonne by midday.

Worries about more cases of COVID-19 in China and higher output are dragging palm oil lower, a Kuala Lumpur-based trader said, adding that sentiment was also hit as investors also booked profits on expectations that prices may not gain further.

China’s capital cancelled several flights, shut schools and blocked off some neighbourhoods as it ramped up efforts to contain an outbreak of the novel coronavirus that has fanned fears of a wider contagion.

The Southern Peninsular Palm Oil Millers Association estimated June 1-10 production in some parts of Malaysia rose 31.7% from the previous month, traders said.

Dalian’s most-active soyoil contract gained 0.2% and its palm oil contract traded flat. Soyoil prices on the Chicago Board of Trade shed 0.3%.

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

Palm oil FCPOc3 may drop to 2,308 ringgit per tonne, as it could have completed a bounce from the June 15 low of 2,294 ringgit, Reuters analyst, Wang Tao said. ($1 = 4.2730 ringgit) (Reporting by Fathin Ungku; Editing by Amy Caren Daniel and Uttaresh.V)

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