Palm tracks soyoil fall as Argentine labour talks could restore supply

KUALA LUMPUR: Malaysian palm oil futures tracked fall in rival soyoil on Tuesday, ahead of talks between Argentina's striking workers and soy byproduct manufacturers that could help clear supply bottlenecks.

The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange fell 26 ringgit, or 0.73%, to 3,516 ringgit ($868.36) a tonne by the midday break, down for a second straight session.

Palm futures were trading lower following weakness in Dalian palm olein and soy oil futures, and a possible reversal in CBOT soyoil as Argentina labour strike issue is expected to be resolved soon, said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.

Argentina's CIARA-CEC chamber of soy byproduct manufacturers will meet on Tuesday with the two main unions representing oilseed workers to try and hammer out a 2021 compensation package.

Dalian's most-active soyoil contract fell 1.2%, while its palm oil contract slipped 1.5%. Soyoil prices on the Chicago Board of Trade were down 0.6%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

The market is waiting for Dec. 1 to 31 palm oil production and export data, as well as Malaysian Palm Oil Board December supply and demand data where end-stocks are expected to fall to 1.4 million tonnes, Bagani said.

Fitch Ratings expects crude palm oil (CPO) prices to decline in 2021 on higher supply and assumes they will average $560/tonne over the year, despite some upside risk, such as a strong La Nina weather pattern.

There are indications that supply and inventory are picking up in top producer Indonesia and high prices are affecting demand from key constituents, such as Indian imports and Indonesian biodiesel, Fitch said in its report.