Palm drops to five-week low on weak rival oils, sluggish demand

JAKARTA: Malaysian palm oil futures dropped to a five-week low on Tuesday, tracking rival oils, as sentiment was weighed by weak demand from top buyers India and China ahead of March output and export data.

The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange dropped 4.6% to 3,574 ringgit ($861.41) a tonne at closing time, the lowest closing level since Feb. 22.

It was the biggest percentage drop since March 16.

Palm oil tracked rival soyoil down as soy was pressured by an upbeat planting outlook in the U.S, a palm oil trader in Kuala Lumpur said.

The USDA is scheduled to release its annual US planting intentions and quarterly grain stocks reports on March 31 and expectations of higher plantings this year are already weighing on the grain markets.

Dalian's most-active soyoil contract fell 1.79% and its palm oil contract lost 1.44% in the afternoon trading. Soyoil prices on the Chicago Board of Trade slipped 0.64%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

Demand from top destinations of palm oil was also muted.

"China was again quiet as margins were in negative zone, while cash market participants were on the sidelines," said Anilkumar Bagani, research head of Mumbai-based vegetable oil broker Sunvin Group, adding that importers from India also did not buy any fresh crude palm oil shipments.

Market participants were now waiting for Malaysian Palm Oil Board data on March production and exports, likely to be released later this week.