KUALA LUMPUR: Malaysian palm oil futures tumbled more than 3 percent on Wednesday to close at their lowest in five months, weighed down by sharp losses in rival edible oils and crude oil, and lingering concerns over the global banking crisis.
The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange slid 117 ringgit, or 3.09%, to 3,667 ringgit ($824.42) a tonne, its lowest closing since Oct. 13.
Palm fundamentals remain strong but trading is weighed down by bearish sentiment, said Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics.
“Adding to the woes is uncertainty over the interest rate decision from the Fed,” Varqa said.
While recent market turmoil has eased, the Federal Reserve’s interest rate decision, due later in the day, is now a major focus for investors, with traders split over whether the US central bank would be forced to pause its hiking cycle to ensure financial stability.
Exports of Malaysian palm oil products for March 1-20 rose 30.4% to 929,274 tonnes from 712,740 tonnes shipped during the same period in February, cargo surveyor Societe Generale de Surveillance said on Tuesday.
Dalian’s most active soyoil contract fell 3%, while its palm oil contract lost 3.7%. Soyoil prices on the Chicago Board of Trade extended losses after falling 3% overnight.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Oil prices fell after an industry report showed US crude inventories rose unexpectedly last week, indicating that fuel demand may be weakening. Lower oil prices make palm a less attractive option for biodiesel feedstock.
Comments