KUALA LUMPUR: Malaysian palm oil futures tumbled on Friday, marking a fourth straight session of falls and second weekly drop in three, shadowing weakness in crude oil prices.
Weaker crude oil prices, headed for a third weekly decline, weighed on the palm oil market. Brent crude oil has fallen by close to $10 in the past three weeks.
Palm oil is used as feedstock to make biodiesel and is less price-competitive when crude oil prices are low.
The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange was down 1.3 percent at 2,148 ringgit ($514.74) a tonne at the close, its lowest level since Oct. 2.
Trading volumes stood at 31,166 lots of 25 tonnes each.
Palm charted a weekly loss of 3.4 percent, the most since Sep. 21.
Market sentiment for palm oil futures had been subdued, and falling crude oil prices were of no help, said one Kuala Lumpur-based trader.
“The market turned negative due to crude oil falling more than a dollar,” she said, adding that this compounded concern over high palm oil stocks and slow exports.
Malaysian palm oil production is seen rising towards the end of the year in line with seasonal trends before tapering off early next year.
Palm oil inventories in September rose to their highest in eight months as production came in higher than exports.
Exports of Malaysian palm oil products for Oct. 1-25 fell 20.2 percent from a month earlier to 1,085,364 tonnes, cargo surveyor Societe Generale de Surveillance said on Friday.
Another trader said the prevailing bearish mood for palm continued with rival vegetable oils also trading lower.
The Chicago December soybean oil contract fell by up to 0.3 percent, while the January soybean oil contract on the Dalian Commodity Exchange slipped by 0.1 percent.
Meanwhile, the Dalian January palm oil contract eased by 0.3 percent.
Palm oil prices are affected by movements of other edible oils that compete in the global vegetable oils market.
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Source: Brecorder
