JAKARTA/SINGAPORE: Malaysian palm oil futures fell on Wednesday, after two consecutive sessions of gains, hurt by a new wave of COVID-19 infections in China and cheaper rival oils elsewhere.
The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange closed 1% lower at 4,962 ringgit ($1,196.24) per tonne, after having gained 1.8% over the previous two sessions.
Palm prices were weighed by losses by rival oils on the Dalian Commodity Exchange and the Chicago Board of Trade (CBOT) as well as crude oil, Anilkumar Bagani, head of research at the Mumbai-based vegetable broker Sunvin Group said.
“Fears of another round of COVID outbreaks in China…. were (among) the main macros behind the profit-taking in palm oil.”
Palm oil gains for second day as supply concerns linger
China has reported nearly 250 locally transmitted cases of COVID-19 since the start of the current outbreak 10 days ago, with many infections in remote towns along porous international borders in the country’s northwest.
Dalian’s palm oil contract fell 1.09%, while the most-active soyoil contract dropped 0.94%. Soy oil prices on the Chicago Board of Trade declined 0.61%.
Crude oil prices fell on Wednesday after industry data showed oil stockpiles rose more than expected and fuel inventories unexpectedly increased last week in the United States.
Palm oil is affected by price movements in related oils as they compete for global market share, while cheaper crude makes palm a less attractive feedstock for biofuel.
Capping the losses, however, were lingering concerns about palm oil supply in Malaysia, Bagani said, which is expected to have fallen in October compared to the month earlier.
Palm oil still targets Oct. 22 low of 4,816 ringgit per tonne, as the bounce from this level has ended, Reuters technical analyst Wang Tao said.