JAKARTA: Malaysian palm oil futures closed lower on Tuesday, weighed down by weaker rival Dalian oils and concerns over China’s retaliation against fresh U.S. tariffs on Chinese goods.
The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange fell 137 ringgit, or 3.06%, to close at 4,347 ringgit ($973.79) a metric ton, the lowest close in nearly a month.
Earlier in the day, China swiftly retaliated against fresh U.S. tariffs, hiking import levies covering $21 billion worth of American agricultural and food products and moving the world’s top two economies a step closer towards an all-out trade war.
“China imposed countermeasures against U.S. tariffs, targeting American agricultural exports, increasing uncertainty in the global vegetable oil markets which has spooked traders,” said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
Dalian’s most-active soyoil contract fell 0.9%, while the palm oil contract lost 3.08%. Soyoil prices on the Chicago Board of Trade (CBOT) dropped 0.55%.
Palm oil tracks price movements of rival edible oils as it competes for a share of the global vegetable oils market.
Malaysia’s palm oil inventories are forecast to fall in February to their lowest in nearly three years on production disruptions caused by floods, a Reuters survey showed.
Meanwhile, India’s palm oil imports rose 36% on-month in February after falling to their lowest since March 2011 in January, according to estimates from dealers.
Oil prices extended losses following reports that OPEC+ will proceed with a planned output increase in April and as U.S. tariffs on Canada, Mexico and China came into effect, as well as Beijing’s retaliatory tariffs.
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
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