JAKARTA: Malaysian palm oil futures ended Wednesday’s morning session lower, erasing the session’s gains, pressured by rising concerns over the COVID-19 restrictions in China amid fresh outbreaks.
The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange fell 0.30% to 3,993 ringgit ($873.93) per tonne by midday break.
Earlier in the day it rose as much as 1.60%, tracking the gains in related oils on the Dalian exchange and crude oil prices. It rose 4.19% over the previous two sessions.
Some market participants took profit after Tuesday’s rally, amid lack of new market leads, while being “on alert” about the impact of COVID-19 lockdown in China, a Kuala Lumpur-based trader said.
A rise in the number of new COVID-19 infections in China prompted the commercial hub of Shanghai to abruptly cancel an auto industry event on Wednesday, creating more uncertainty about the reopening plans of the world’s second largest economy.
Palm earlier made modest gains on the back of a rise in soybean oil and expectations of lower November production in Malaysia, said Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics. However there appears to be a lack of sustained buying interest, he added.
Meanwhile, Dalian’s most-active soyoil contract saw a thin gain of 0.04%, while its palm oil contract rose 1.44%. Soyoil prices on the Chicago Board of Trade were down 0.28%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
The benchmark may test a support at 3,922 ringgit a tonne, a break below which could open the way towards 3,994-4,072 ringgit range, Reuters technical analyst Wang Tao said.