SHANGHAI: China’s edible oil futures plunged on Tuesday, as trading resumed after a national holiday, following news that the US government was considering offering fuel refiners relief from biofuel blending mandates.
Palm oil futures on the Dalian Commodity Exchange fell by more than 7percent at its open, its sharpest declines since February. It last traded down 6.4percent at 7,052 yuan ($1,101.74) per tonne, around its lowest levels in two months.
Dalian’s soyoil futures and rapeseed oil futures on the Zhengzhou Commodity Exchange both declined more than 5percent in early trade.
The Dalian soyoil futures contract was last down 5percent at 8,254 yuan per tonne, while Zhengzhou’s rapeseed oil futures pared some losses and was last down 4percent at 10,211 yuan per tonne.
Three analysts said news that President Joe Biden’s administration is considering ways to provide relief to US oil refiners from biofuel blending mandates weighed on US soyoil and Malaysian palm oil prices, which in turn led to falls in edible oil futures on Chinese exchanges.
“Additionally, last week’s data from the Malaysian Palm Oil Board showed domestic production... and inventories increased,” said Orient Futures analyst Wang Yujie.
“It’s expected that international vegetable oil supply will gradually increase and supply pressure will strengthen.”
Official data last week showed that Malaysia’s palm oil inventories and production rose at end of May, though the gains were smaller than expected.
China’s related agriculture futures contracts were also impacted by the decline in edible oils, analysts said. Soybean meal on the Dalian exchange fell 4percent to 3,494 yuan per tonne, while rapeseed meal on the Zhengzhou exchange declined 4.8percent to 2,906 yuan per tonne on Tuesday.
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