Palm falls over 1% as soyoil, uncertain Indonesian policy weigh

KUALA LUMPUR: Malaysian palm oil futures dropped more than 1% on Tuesday, ending a four-session rally, pressured by weakness in soyoil and the uncertainty over several key Indonesian policies.

The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange slid 71 ringgit, or 1.53%, to 4,583 ringgit ($1,170.33) a metric ton at the close.

Crude palm oil futures were seen trading lower following weaker soyoil prices and the lack of confirmation over Indonesia’s palm oil export policies, said Anilkumar Bagani, commodity research head at Sunvin Group, a Mumbai-based brokerage.

Indonesia’s revision in export taxes and the absence of clarity over its B50 biodiesel mandate also weighed on prices, Bagani said, referring to a blend of 50% palm oil-based biodiesel and 50% conventional diesel.

Dalian’s most-active soyoil contract fell 0.78%, while its palm oil contract rose 0.3%. Soyoil prices on the Chicago Board of Trade were up 0.08%.

Palm oil tracks price movements of rival edible oils, as it competes for a share of the global vegetable oils market.

Meanwhile, oil prices rose by about 4%, clawing back some of the previous session’s losses as Iranian attacks on the United Arab Emirates rekindled supply fears while the Strait of Hormuz remains largely shut.

Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.

Cargo surveyors estimated that exports of Malaysian palm oil products for March 1-15 rose between 43.5% and 56.9% month-on-month.

The ringgit, palm’s currency of trade, strengthened 0.31% against the dollar, making the commodity slightly more expensive for buyers holding foreign currencies.