Palm oil for February delivery dipped 1.1 percent to 3,680 ringgit ($1,177) per metric ton after striking 3,766 ringgit ($1,150) on Tuesday, which was the commodity's highest value since March 2008. The commodity has soared 38 percent thus far this year, en route to a second straight year of gains.
Tuesday's slip in price "could be due to profit-taking activities as some investors cashed in after a record rally," Ker Chung Yang, an analyst at Phillip Futures, told Bloomberg.
Inclement weather in Indonesia and Malaysia is expected to negatively impact oil palm yields, which have suffered because of dry conditions caused by El Niño and heavy rainfall generated by La Niña.
"The market is factoring in the fact that we will still have a rather poor production in the first half of next year," Alvin Tai, an analyst at OSK Research, told Bloomberg.
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.