KUALA LUMPUR: Malaysian palm oil futures snapped four consecutive sessions of gains on Tuesday to record their sharpest daily drop in a week as the market tracked a weaker performance in rival oils and on the back of slow export demand.
The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange fell 0.9 percent to 2,466 ringgit ($575.90) a tonne at the close.
Palm is down nearly 6 percent in the second quarter of the year from the previous quarter, as an increase in output has put pressure on prices.
Traded volumes stood at 51,507 lots of 25 tonnes.
"Palm oil declined as it was dragged down by a weaker overnight market, and partly on export weakness," said a Kuala Lumpur-based trader, referring to the drop in soyoil on the Chicago Board of Trade.
Palm oil prices are affected by movements of related edible oils such as soyoil, as they compete for a share of the global vegetable oils market.
Soybean oil on the Chicago Board of Trade slipped as much as 0.2 percent, after closing down 0.9 percent in the previous session.
In other related oils, the September soybean oil on the Dalian Commodity Exchange lost 1.3 percent, while the September palm olein contract dropped up to 1.8 percent.
Demand for the tropical oil is also seen weakening in June following the end of the Muslim Ramadan season. Shipments fell 14.8 percent during June 1-20 versus the corresponding period last month, according to data from cargo surveyor Intertek Testing Services on Tuesday.
Another cargo surveyor, Societe Generale de Surveillance, reported a 16.7 percent drop in exports for the same time period.
The fasting month of Ramadan, which began at end-May this year, typically sees Muslims break day-long fasts with communal feasting. This incurs higher palm oil usage for cooking purposes, though buyers usually stock up on supplies a month before the festivities begin.
Comments
Comments are closed.