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Sunday, February 25, 2024

Palm oil at three-week low on firmer ringgit, demand woes

KUALA LUMPUR: Palm oil futures in Malaysia fell on Friday to their lowest levels in three weeks and were set for a second consecutive weekly loss, dented by a stronger ringgit, tepid demand and the government’s suggestion to ban exports to the European Union.

The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange slid 55 ringgit, or 1.41%, to 3,856 ringgit ($889.50) a tonne in early trade.

For the week, the contract has lost 4.8%.

There are concerns about demand for Malaysian palm oil from biggest buyers India and China after early-January exports plunged by about half, as buying is slow because the destination markets are stocked up on the edible oil, traders said.

Malaysia said on Thursday it could stop exporting palm oil to the EU in response to a new law aimed at protecting forests by strictly regulating sale of the product.

The idea mooted by Malaysia is a bearish signal when traditional export destinations are already reducing demand due to price parity and stiff competition from Indonesia, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.

India’s palm oil imports in December surged 96% to a record high from a year earlier as palm oil’s hefty discount to rival edible oils led refiners to raise purchases during the seasonally weak winter period, Solvent Extractors’ Association of India said.

Palm oil production in the world’s largest producers, Indonesia and Malaysia, will remain squeezed this year amid anticipation of rising demand from key market China, industry officials said in a seminar on Thursday.

Palm oil hits near three-week closing low

The ringgit, palm’s currency of trade, rose 0.5% against the dollar, making the commodity more expensive for buyers holding other currency.

Dalian’s most-active soyoil contract dipped 0.1% while its palm oil contract fell 1.1%.

Soyoil prices on the Chicago Board of Trade slipped 0.5%.

Also read

Palm oil at three-week low on firmer ringgit, demand woes

Source: Brecorder

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