KUALA LUMPUR: Malaysian palm oil futures fell for a second consecutive session on Tuesday, pressured by weakness in rival edible oils and crude oil prices, although robust export data limited the fall.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange closed down 1.04% at 4,268 ringgit ($993.26) a metric ton, and has lost 1.89% in two sessions.
The market is being pressured by overnight weakness in Chicago soyoil and lower Dalian palm olein prices, said David Ng, a proprietary trader at Kuala Lumpur-based trading firm Iceberg X Sdn Bhd.
Weakness in the crude oil market also caused a major drag for palm prices, he said.
Dalian’s most-active soyoil contract fell 1.52% and its palm oil contract declined 2.2%. Soyoil prices on the Chicago Board of Trade were down 0.62%, amid persistent weakness in the CBOT soybean contract.
Palm erases early gains; speculative buying, short covering caps losses
“I think (the fall in Dalian oils) is mainly due to external factors driven by weakness in crude oil and lower U.S. bean oil prices,” he said.
Palm oil tracks prices of rival edible oils, as they compete for a share of the global vegetable oils market.
“However, a strong export pace that is seen so far is keeping the losses limited,” he said.
Cargo surveyors estimate exports of Malaysian palm oil products rose between 14% and 15.6% during Oct. 1-15, compared with the same period a month ago.
Oil prices tumbled more than 4% to a near two-week low due to a weaker demand outlook and after a media report said Israel is willing to not strike Iranian oil targets, easing fears of a supply disruption.
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
The ringgit, palm’s currency of trade, weakened 0.37% against the U.S. dollar, making the commodity cheaper for buyers holding foreign currencies.
Source: Brecorder
