KUALA LUMPUR: Malaysian palm oil futures declined on Tuesday, and have now fallen in three of the past four days, tracking losses in global financial markets and as traders booked profits.
Stock markets tumbled worldwide as investors fled from equities, spooked by a sharp rise in US bond yields following data that showed US wages increasing at the fastest pace since 2009. This raised concerns about rising inflation and potentially higher interest rates.
Malaysian shares plunged as much as 3.1 percent, in their biggest intraday percentage drop since April 2013.
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange closed down 0.8 percent at 2,470 ringgit ($631) a tonne.
It had gained nearly 1 percent in the previous session, but had lost ground in the preceding two days.
Trading volumes stood at 39,477 lots of 25 tonnes each at the end of the trading day.
"The market is trading cautiously following broad-based weakness in financials and commodities around the globe," said a trader from Kuala Lumpur, while another said profit taking also contributed to the decline.
Palm oil is unlikely to see strong gains until stockpiles start to reduce, said another Kuala Lumpur-based trader.
"Supplies of the world's edible oils are very high, so importers are spoilt for choice," he said.
Palm oil competes with other edible oils such as soyoil and rapeseed oil in the global vegetable oils market.
Malaysian palm oil stocks are expected to have gained 0.6 percent in January to 2.75 million tonnes, which would be a new two-year high, according to a Reuters poll, as exports likely came in below output levels.
Palm oil looks neutral in a range of 2,481-2,520 ringgit per tonne, said Wang Tao, a Reuters market analyst for commodities and energy technicals.
In other related edible oils, the March soybean oil contract on the Chicago Board of Trade was up 0.1 percent, while the May soybean oil on the Dalian Commodity Exchange fell 0.1 percent.
In other related edible oils, the Dalian May palm oil contract rose 0.6 percent.
Comments
Comments are closed for this article.