KUALA LUMPUR: Malaysian palm oil futures fell to a two-month low on Wednesday, pressured by sluggish demand from key destination buyers. Benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange was down 41 ringgit, or 0.91percent, at 4,440 ringgit (USD1,130.35) a metric ton, the lowest closing price since March 10.
The market is worried about the lack of demand from key buyers, India and China, said Paramalingam Supramaniam, director at brokerage Pelindung Bestari.
“Buyers from India have basically switched to soybean oil from Argentina, while China has been stepping back from nearby purchases and is showing more interest in forward buying, particularly for December delivery,” he said.
This has created a demand vacuum in the near-term market, he added. India’s palm oil imports slumped 26percent in April to the lowest in four months as weak institutional demand and a price rally that narrowed palm oil’s discount to competing oils discouraged refiners from boosting purchases, Mumbai-based Solvent Extractors’ Association of India said.
Dalian’s most-active soyoil contract fell 0.04 percent, while its palm oil contract shed 1.28percent. Soyoil prices on the Chicago Board of Trade were up 0.11percent.
Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market. Oil prices eased, snapping a three-day rally as investors awaited developments on the fragile Middle East ceasefire and braced for a high-stakes summit in Beijing between US President Donald Trump and China’s Xi Jinping.
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
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