KUALA LUMPUR: Malaysian palm oil futures fell over 2% on Friday, hitting a two-week low and on course for a weekly fall, after the contract tracked losses in rival edible oils and as poor import margins in key markets hurt demand.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange was down 104 ringgit, or 2.4%, at 4,225 ringgit ($1,013.92) a tonne by the midday break, its lowest since Sept. 2.
Palm is set to fall 1.2% for the week, its third consecutive weekly loss.
The decline was a result of bearish momentum in global vegetable oils and India's hike in fortnightly import tariffs, which made palm less competitive against sunflower oil and canola oil, said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
"Given the heavy selloff in Bursa Malaysia today and overall downward correction in global vegetable oil complex, we expect importers to stay away from palm oil buying for the time-being," Bagani said.
Soyoil prices on the Chicago Board of Trade were down 0.6%. Dalian's most-active soyoil contract fell 2.8% while its palm oil contract eased 4.2%.
The Chinese market was quiet amid negative import margins and ahead of long holidays, Bagani said. The Dalian will be closed from Saturday and will resume trade on Wednesday.
Palm oil hits 10-day closing high
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
"In Indonesia, traders are estimating slower palm oil production growth in remaining 2021 period, but we believe the lower production pace has been priced in and the lower biodiesel production numbers are bearish for the market," Bagani said.
Palm oil may break a resistance at 4,439 ringgit per tonne, and rise towards 4,507 ringgit, Reuters technical analyst Wang Tao said.
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