KUALA LUMPUR: Malaysian palm oil futures fell to a five-week low on Tuesday, as weaker crude oil prices and rival edible oils weighed on the market.
The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange slid 87 ringgit, or 1.91percent, to 4,468 ringgit (USD1,131.43) a metric ton, its lowest closing since March 10.
The market traded softer due to external pressures, with crude oil down because of easing geopolitical risk as talks around a possible Iran deal raised expectations that supply disruptions could be resolved, a Singapore-based analyst said.
“This is weighing on overall vegetable oils sentiment, with Dalian and Chicago soyoil down as well.” The benchmark Brent crude shed 0.84percent to USD98.53 a barrel at 1014 GMT.
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock. Dalian’s most-active soyoil contract fell 0.48percent, while its palm oil contract shed 1.68percent. Soyoil prices on the Chicago Board of Trade were down 0.62percent.
Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market. Cargo surveyors are expected to release their export estimates of Malaysian palm oil products for April 1-15 on Wednesday.
The analyst said the market expects exports to slow down after the strong pace in March. India’s palm oil imports in March dropped nearly 19percent month-on-month and hit a three-month low after a rally in tropical oil prices prompted refiners to hold back purchases, Mumbai-based Solvent Extractors’ Association of India said.
The ringgit, palm’s currency of trade, strengthened 0.6percent against the dollar, making the commodity more expensive for buyers holding foreign currencies.
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