KUALA LUMPUR: Malaysian palm oil futures slumped on Thursday, snapping a five-session rally, as weaker Dalian oils and declines in crude oil prices sparked by talks to end the Ukraine-Russia war weighed on the market.
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange slid 65 ringgit, or 1.41%, to 4,556 ringgit ($1,023.13) a metric ton at the close.
Crude palm oil futures were lower following a selloff in energy markets after U.S. President Donald Trump initiated diplomatic efforts to end the war in Ukraine, said Anilkumar Bagani, commodity research head at Mumbai-based Sunvin Group.
“The easing of the Ukraine-Russia war suggests that the high logistics costs and uncertainty surrounding Black Sea sunflower oil trade may finally be resolved, potentially normalising the flow of sunflower oil to key destination markets,” he said.
Freight rates are expected to decrease along the Black Sea corridor, which could lead to lower sunflower oil prices and consequently put pressure on palm oil prices, he added.
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Oil prices fell slightly as a potential peace deal between Russia and Ukraine continued to exert downward pressure, along with rising crude inventories in the United States.
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
Trump on Wednesday initiated discussions with both Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy to begin talks on ending the war in Ukraine while China has also pushed for peacekeeping efforts to end the war.
Bagani said downward pressure on the market was also seen from the declines in Chinese palm olein and soyoil.
Dalian’s most active soyoil contract fell 2.22%, while its palm oil contract lost 2.1%. Soyoil prices on the Chicago Board of Trade were down 1.1%.
Palm oil tracks price movements of rival edible oils, as it competes for a share of the global vegetable oils market.
The ringgit, palm’s currency of trade, strengthened 0.38% against the dollar, making the commodity more expensive for buyers holding foreign currencies.
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