Palm hits two-week low on weaker Dalian, crude oil amid Mideast uncertainty

KUALA LUMPUR: Malaysian palm oil futures slipped to their lowest in two weeks on Wednesday, tracking weaker crude oil prices and declines in Dalian oils, while uncertainty over prospects of de-escalation in the Middle East conflict added to the pressure.

The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange ended down 41 ringgit, or 0.9%, at 4,496 ringgit ($1,134.78) a metric ton.

The decline in crude oil prices and Dalian weighed on the palm market, as sentiment continues to be largely driven by crude oil with little regard for fundamentals, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.

“Everything hinges on crude oil sentiment and the ongoing talks surrounding negotiations to end the war between Iran and the U.S.,” Supramaniam added.

Oil prices sank about 4% after reports that the United States had sent Iran a 15-point proposal aimed at ending the war in the Middle East, raising prospects of a ceasefire that could ease supply disruptions in the region.

Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.

Weak demand also weighed on prices, with Indian vegetable oil refineries curtailing purchases of palm oil, soyoil, and sunflower oil, betting that the Iran war-driven price rally will not last, industry officials told Reuters.

Dalian’s most-active soyoil contract fell 0.67%, while its palm oil contract shed 1.74%. Soyoil prices on the Chicago Board of Trade were down 0.09%.

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

Cargo surveyors estimated that exports of Malaysian palm oil products for March 1-25 rose between 38.4% and 50.6% month-on-month.

The ringgit, palm’s currency of trade, weakened 0.23% against the dollar, making the commodity slightly cheaper for buyers holding foreign currencies.