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Markets

Palm slides to 2-week low as US soyoil, slowing demand growth weighs

KUALA LUMPUR: Malaysian palm oil futures fell over 2% at the close of trade on Tuesday, pressured by weaker export g

03 Sep, 2019

KUALA LUMPUR: Malaysian palm oil futures fell over 2% at the close of trade on Tuesday, pressured by weaker export growth and losses in soyoil on the Chicago Board of Trade.

The benchmark palm oil contract for November delivery  on the Bursa Malaysia Derivatives Exchange was last down 2.4% at 2,181 ringgit ($520.53) per tonne on Tuesday evening, the third session of decline in five days and its biggest daily decline in four months.

Palm earlier fell to an intraday low of 2,179 ringgit, its lowest level since Aug. 21.

A Kuala Lumpur-based futures trader said the drop in US soyoil prices and slowing export growth weighed on palm.

"The spillover weakness from palm's spot month contract also weighed on prices," she added, referring to Bursa's palm oil contract for September delivery, which was last down 2.9%.

Malaysian palm oil exports rose 15.6% for the full month of August, according to data from cargo surveyor Societe Generale de Surveillance released on Tuesday. The increase however is smaller the than rise in demand from Aug. 1-25 which gained nearly 20% versus the corresponding period in July.

In other related oils, US soyoil futures on the Chicago Board of Trade were last down 1.2%.

US wheat futures fell nearly 0.5% on Tuesday, set to extend losses for a fourth straight session, as ample global supplies pushed prices towards a near four-month low. Soybeans fell as the market remained focused on the impact of the protracted US-China trade war, while corn also slid.

Meanwhile, the September soyoil contract on the Dalian exchange edged up 0.1% and the Dalian September palm oil contract rose 0.4%.

Palm oil prices are affected by movements in related oils, as they compete for a share in the global vegetable oils market.

Copyright Reuters, 2019