JAKARTA/KUALA LUMPUR: Malaysian palm oil futures declined more than 3% on Tuesday, snapping a four-day rally, as weaker rival Chicago soyoil and crude oil prices weighed on the market after a ceasefire deal between Israel and Iran eased tensions in the region.
The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange lost 140 ringgit, or 3.39%, to 3,986 ringgit ($940.09) a metric ton at the close, its biggest daily decline since April 4.
Crude palm oil prices fell, tracking weakness in the Chicago soybean oil and crude oil markets amid the easing tensions in the Middle East, said David Ng, a proprietary trader at Kuala Lumpur-based trading firm Iceberg X Sdn Bhd.
Dalian’s most-active soyoil contract fell 2.21%, while its palm oil contract shed 2.14%. Soyoil prices on the Chicago Board of Trade slipped 2.14%. Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market. Oil prices extended losses to hit a two-week low on Tuesday after Israel agreed to US President Donald Trump’s proposal for a ceasefire with Iran, alleviating worries over supply disruptions in the Middle East.
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock. Indonesia exported 1.78 million tons of palm oil, including refined products, in April, down from 2.18 million tons a year earlier, data from the Indonesia Palm Oil Association showed. India’s soyoil imports in June are likely to fall by 18% from a month ago to a four-month low, as congestion at a key port will lead to unloading vessels into July instead of June.
The ringgit, palm’s currency of trade, strengthened 1.21% against the dollar, making the commodity more expensive for buyers holding foreign currencies.
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