KUALA LUMPUR: Malaysian palm oil futures declined more than 2% on Tuesday, hitting their lowest since August 8, after top soyoil exporter Argentina temporarily scrapped its export tax, making soyoil cheaper than palm oil.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange slid 102 ringgit, or 2.3%, to 4,341 ringgit ($1,034.56) a metric ton at the close, after a 0.41% rise in the previous session.
The Argentina news triggered a massive sell-off in the Chicago and Dalian markets that has spread to the palm oil market, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
Argentina temporarily eliminated export taxes on grains and their by-products on Monday, looking to speed up sales abroad and rake in much-needed dollars to prop up the flagging peso currency. The suspension runs through the end of October, or until exports reach $7 billion.
Losses in palm oil were limited by a slowdown in September production in Malaysia and expectations that the monsoon will reduce yields in the fourth quarter, Supramaniam said.
The duty-free exports have made Argentine soyoil shipments cheaper than palm oil, not only for African buyers but also for buyers in India, said a Mumbai-based trader.
Dalian’s most-active soyoil contract fell 3.14%, while its palm oil contract shed 2.92%. Soyoil prices on the Chicago Board of Trade were down 0.22%.
Palm oil tracks price movements of rival edible oils, as it competes for a share of the global vegetable oils market.
Oil prices edged higher even as investors weighed the global supply outlook after Iraq and Kurdish regional governments reached a preliminary agreement to restart an oil pipeline.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
Comments
Comments are closed for this article.