MUMBAI: Malaysian palm oil futures dropped in early trade on Thursday, weighed down by weakness in rival Chicago soyoil and a correction in crude oil prices.
Malaysian palm oil futures up due to lower
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange fell 18 ringgit, or 0.46%, to 3,930 ringgit ($822.00), after rising more than 1% on Wednesday.
Fundamentals
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Soyoil prices on the Chicago Board of Trade were down 0.53%.
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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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Chicago soybean futures fell on Thursday to their lowest level since December 2020 as speculators responded to ample supply and a strong US dollar by betting on further price drop.
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Rains in recent days across Argentina’s main growing regions cemented expectations for large corn and soybean harvests there.
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Oil prices eased in early trade on Thursday after data showed that US crude inventories jumped much more than expected, raising concerns about demand in the world’s largest economy.
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Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
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Palm oil may retrace towards a range of 3,916 ringgit to 3,925 ringgit per metric ton, as it faces a strong resistance zone of 3,964 ringgit to 3,967 ringgit, Reuters technical analyst Wang Tao said.
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Malaysia’s palm oil stocks fell more than expected to their lowest in six months at the end of January as production plunged to the lowest level in nine months amid steady exports, the industry regulator said on Tuesday.
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The rebound in palm oil prices is likely to be capped by abundant supplies of rival soyoil and sunflower oil, “soft” oils that are available at discounts to tropical palm oil for the first time in more than a year.
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