Palm slips over 1% on weak demand, soft soyoil and crude oil

KUALA LUMPUR: Malaysian palm oil futures settled more than 1% lower on Thursday, reversing gains from the previous session, as subdued export demand, along with weaker soyoil and crude oil prices, pressured the market.

The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange was down 75 ringgit, or 1.6%, at 4,602 ringgit ($1,147.63) a metric ton at the close.

The market traded lower, driven by weakness in soybean oil and crude oil prices during Asian hours, while recent softness in crude palm oil demand also weighed, said David Ng, a proprietary trader at Kuala Lumpur-based trading firm Iceberg X Sdn Bhd.

Dalian’s most-active soyoil contract fell 0.63%, while its palm oil contract shed 1.59%. Soyoil prices on the Chicago Board of Trade were down 0.19%.

Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market.

Cargo surveyors estimated that exports of Malaysian palm oil products for May fell between 8.8% and 15.5% from a month earlier.

Oil prices fell after a ceasefire deal between Israel and Lebanon boosted hopes for a broader agreement to end the U.S.-Israeli war with Iran that could lead to a reopening of the Strait of Hormuz.

Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.

The ringgit, palm’s currency of trade, weakened 0.5% against the dollar, making the commodity cheaper for buyers holding foreign currencies.

Malaysia’s palm oil inventories are expected to rise for a second straight month in May, as sluggish exports outweigh the impact of lower output, a Reuters survey showed.