JAKARTA: Malaysian palm oil futures fell more than 2% on Monday, their biggest daily drop in more than a month, weighed down by weakness in rival Dalian and Chicago oils, while weak demand from top buyer India also pressured the market.
The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange lost 104 ringgit, or 2.23%, to 4,560 ringgit ($1,034.48) a metric ton at closing.
Sharp losses in rival oils dampened market sentiment, said a Kuala Lumpur-based trader.
Dalian’s palm oil contract fell 1.64%, while its most-active soyoil contract was up 0.15%. Soyoil prices on the Chicago Board of Trade were down 0.61%.
Palm oil tracks price movements of rival edible oils, as it competes for a share of the global vegetable oils market.
Palm oil demand by top buyer India in the 2024/25 marketing year ending in October could fall to as low as 7.5 million tons, the lowest in five years, as its rising premium over soyoil and sunflower oil pushes refiners towards more affordable alternatives, an industry body said.
Palm oil logs fifth weekly gain on output concerns
Indian refiners have cancelled orders for 100,000 tons of crude palm oil scheduled for delivery between March and June because of a surge in benchmark Malaysian prices and negative refining margins in India, four trade sources said.
India is likely to raise import taxes on vegetable oils for the second time in less than six months to help support thousands of oilseed farmers reeling from a crash in domestic oilseed prices, two government sources said.
Malaysia’s palm oil stocks are set to fall to 1.5 million metric tons by the end of February, their lowest level in nearly two years, as floods have hit production and the Ramadan festival has boosted demand, a senior regulatory official told Reuters.
Comments