JAKARTA: Malaysian palm oil futures declined for a second session on Wednesday, dragged down by the weakness in prices of rival vegetable oils in Dalian and Chicago.
Palm falls weighed by rival vegetable oils
The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange lost 158 ringgit, or 3.14%, to 4,868 ringgit ($1,095.66) a metric ton as of 0234 GMT.
Fundamentals
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Dalian’s most-active soyoil contract plunged 3.82%, while its palm oil contract tumbled 4.12%. Soyoil prices on the Chicago Board of Trade were down 1.45%.
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Palm oil tracks price movements of rival edible oils as it competes for a share in the global vegetable oils market.
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Chicago soybean futures took a sharp dive on Tuesday as traders worried that US President-elect Donald Trump’s nominee for the head of the US Environmental Protection Agency would take a less-than-friendly view of the biofuel industry, analysts said.
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Exports of Malaysian palm oil products in the Nov. 1-10 period are seen falling between 14.6% and 15.8%, compared with the same period a month ago, according to surveyors AmSpec Agri Malaysia and Intertek Testing Services (ITS).
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Malaysia’s palm oil inventory shrank the most in seven months in October as exports surged, production fell and domestic consumption increased, the country’s industry regulator said on Monday.
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Oil prices held near a two-week low on Tuesday after dropping about 5% over the past two sessions as investors absorbed OPEC’s latest downward revision for demand growth, a stronger US dollar and disappointment over China’s latest stimulus plan.
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Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
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Palm oil FCPOc3 may break support at 5,017 ringgit and fall into the 4,882-4,947 ringgit range. The current correction is expected to consist of three waves, according to Reuters’ market analyst for commodities and energy technicals Wang Tao.
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