KUALA LUMPUR: Malaysian palm oil futures extended losses to a second session on Tuesday, hitting their lowest in six weeks due to heavy losses in rival edible oils and poor demand.
The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange closed down 80 ringgit, or 2.12% at 3,692 ringgit ($806.11) per metric ton, its lowest since June 28.
The macroeconomics scenario is weighing heavily on the edible oil complex after Fitch downgraded the U.S debt market, said Sandeep Singh, director of The Farm Trade, a Kuala Lumpur-based consulting and trading firm.
Palm oil exports are expected to be lower in August while stocks are expected to increase marginally in the coming months, he added.
Meanwhile, Indonesia’s consumption of palm oil-based biodiesel for the first six months of this year was 5.41 million kilolitres, data from palm oil fund agency BPDPKS showed on Tuesday.
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Rating agency Fitch last week downgraded the United States to AA+ from AAA, citing fiscal deterioration over the next three years and repeated down-the-wire debt ceiling negotiations that threaten the government’s ability to pay its bills.
In related oils, soyoil prices declined after U.S. government data reported better-than-expected improvement in weekly condition ratings for soybeans.
The USDA rated 54% of the soybean crop as good to excellent, up from 52% last week, and above the average analyst estimate of 53%.
Soyoil prices on the Chicago Board of Trade fell 1.7%. Dalian’s most-active soyoil contract lost 2.3%, while its palm oil contract slumped 2.7%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
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