Palm oil tracks rival edible oils and crude lower; heads for weekly gain

JAKARTA: Malaysian palm oil futures fell on Friday, tracking weaker rival edible oils on the Dalian and Chicago exchanges and crude oil, but remained on track for a weekly gain.

The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange fell 30 ringgit, or 0.61%, to 4,906 ringgit ($1,203.93) a metric ton by the midday break.

The contract has gained 1.91% so far this week.

“FCPO futures remained in negative territory on Friday, mirroring selling pressure across the broader commodity complex during Asian trading hours,” a Kuala Lumpur-based trader said.

Dalian’s most-active soyoil contract fell 1.56%, while its palm oil contract lost 1.64%.

Soyoil prices on the Chicago Board of Trade were down 0.74%.

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

Market participants are closely monitoring an official announcement from the Indian government on a potential reduction in import tariffs, which could have implications for Malaysian palm oil demand, the trader said.

Oil prices fell for a third day as easing concerns over Saudi supply disruptions outweighed anxiety about a widening Middle East conflict amid fresh fighting between Saudi Arabia and Yemen’s Houthis.

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

Palm oil output in Indonesia’s major producing region, Kalimantan, could fall by 12% to 15% in the fourth quarter, with plantations hit by prolonged dry weather and widespread fires, an analyst said on Wednesday.

The ringgit, palm’s currency of trade, gained 0.51% against the dollar, making the commodity more expensive for buyers holding foreign currencies.

Palm oil FCPOc3 may test a support at 4,900 ringgit per metric ton, a break below which could open the way toward the 4,841-4,865 ringgit range, Reuters technical analyst Wang Tao said.