Palm slips more than 1% on weaker crude, Chinese vegetable oils
- Dalian’s most-active soyoil contract fell 1.42%
KUALA LUMPUR: Malaysian palm oil futures fell more than 1% on Monday, retreating from a 15-week high in the previous session, weighed down by weaker crude oil and Chinese vegetable oil prices, though robust demand from China capped the decline.
The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange slid 49 ringgit, or 1.04%, to 4,673 ringgit ($1,144.50) a metric ton at the close.
Crude palm oil futures traded lower, pressured by heavy declines in energy futures, Chicago soyoil, Dalian palm olein and Zhengzhou’s rapeseed oil during Asian hours, said Anilkumar Bagani, commodity research head at Sunvin Group.
“However, the strong demand from China, optimism of higher consumption under Indonesia’s B50 biodiesel mandate, the tightness in palm oil exports from Indonesia as well as El-Nino related risks limited losses,” Bagani added.
Oil prices tumbled more than 5% on Monday after the U.S. and Iran paused strikes over the weekend following two weeks of attacks, raising hopes of a diplomatic solution that would de-escalate the conflict and allow shipping to resume in the Strait of Hormuz.
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
Dalian’s most-active soyoil contract fell 1.42%, while its palm oil contract shed 1.66%. Soyoil prices on the Chicago Board of Trade were down 2.17%.
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 July 1-25 rose between 8.1% and 15.9% from a month earlier.
The ringgit, palm’s currency of trade, strengthened 0.12% against the dollar, making the commodity slightly more expensive for buyers holding foreign currencies.
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