Palm falls for second session on crude oil weakness

KUALA LUMPUR: Malaysian palm oil futures settled lower for a second straight session on Tuesday, erasing intraday gains, as weaker crude oil prices weighed on the market.

The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange shed 45 ringgit, or 0.94%, to 4,766 ringgit ($1,183.22) a metric ton at the close.

The market continues to hinge on the direction of crude oil prices amid ongoing uncertainty over the geopolitical situation in the Middle East, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.

At 1010 GMT, the benchmark Brent crude shed 0.75% to $111.93 a barrel. Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.

“If exports continue in the same direction as we saw in March and existing stock levels hold steady, the market is expected to remain resilient,” Supramaniam said.

Malaysia’s palm oil inventories likely dropped in March by the most in three years to their lowest level since last July, as a surge in exports more than offset a modest increase in output, a Reuters survey showed.

The Malaysian Palm Oil Board is expected to release its supply and demand report on April 10.

Dalian’s most-active soyoil contract rose 0.85%, and its palm oil contract fell 0.36%. Soyoil prices on the Chicago Board of Trade firmed 0.11%.

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

The ringgit, palm’s currency of trade, weakened 0.07% against the dollar, making the commodity slightly cheaper for buyers holding foreign currencies.