SINGAPORE: Malaysian palm oil futures ended lower for a second consecutive session to log its worst day in two weeks as rival edible oils fell, with oversupply worries denting investor sentiment on Tuesday.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange slid 141 ringgit, or 3.98%, to 3,405 ringgit ($767.76) a tonne, its largest daily drop since May 16.
The benchmark contract fell as low as 4.31% earlier in the session.
“Large losses in palm and soybean oil on Dalian, plus lingering worry on rising May production outstripping demand are weighing down prices,” said Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics.
May production is expected to rise about 20% from April, rebounding from the lows seen during the Raya holidays, Varqa added.
Dalian’s most-active soyoil contract fell 2.0%, while its palm oil contract eased 2.3%. Soyoil prices on the Chicago Board of Trade dropped 1.3%.
Palm drops more than 1% on weaker rival oils
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Indonesia aims to accelerate its palm oil replanting programme to double the area it covered between 2017 and 2022 in an effort to maintain production levels, a government official said on Tuesday.
Meanwhile, India’s weather department said monsoon rains had advanced into more parts of southwest Bay of Bengal after stalling for the past 11 days.
Oil fell by nearly 2% on Tuesday as concerns about the U.S. debt ceiling pact cooled the market’s risk-on sentiment and mixed messages from major producers clouded the supply outlook ahead of their meeting this weekend.
Lower oil prices make palm oil a less attractive option as biodiesel feedstock.
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