Malaysian palm oil futures fell on Thursday, snapping two days of gains, as it tracked weaker crude oil prices and a drop in US soyaoil in Chicago. The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange closed down 1 percent at 2,239 ringgit ($538.87) a tonne, its sharpest decline in a week.
It fell as much as 1.6 percent during the day to 2,224 ringgit. Trading volumes totalled 54,283 lots of 25 tonnes each. "Palm is down mirroring weakness in competing vegetable oils," said a Kuala Lumpur-based trader, referring to soyaoil on the Chicago Board of Trade and related edible oils on China's Dalian Commodity Exchange.
A drop in crude oil prices also contributed to palm's declines, he said. Oil fell below $80 a barrel on Thursday as a fourth weekly increase in US crude inventories suggested ample supply, although Saudi-US tension and falling Iranian exports lent support.
Palm prices are affected by movements in crude oil, as the vegetable oil is used as feedstock to make biodiesel.
Palm oil also competes with other edible oils in the global vegetable oils market and so is affected by their price movements. The Chicago December soyabean oil contract was down 0.9 percent on Thursday as the harvest of a record US crop picked up steam this week and on a lack of demand for US soyabean supplies from China. The January soyabean oil contract on the Dalian Commodity Exchange declined 1.4 percent and the Dalian January palm oil contract fell 1.5 percent.
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