Malaysian palm oil futures charted a decline on Wednesday evening after two sessions of gains, falling over 1% tracking overnight weakness in crude oil and Chicago Board of Trade (CBOT) soyaoil. The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange was down 0.6% at 1,955 ringgit ($472.79) per tonne by the close of trade.
It earlier fell as much as 1.5% to 1,938 ringgit, matching Tuesday's intraday low that was the weakest level since August 2015. Palm oil may retest a support at 1,944 ringgit per tonne, a break below which could cause a drop to 1,908 ringgit, said Wang Tao, a Reuters market analyst for commodities and energy technicals.
The market was under pressure from weaker overnight crude oil and CBOT soyaoil prices, said two Kuala Lumpur-based traders. "The absence of positive market-moving factors coupled with weakness in competing vegetable oils may cap (palm oil's) upside momentum," said one of the traders. Crude oil prices edged higher on Wednesday, steadying after a more than 4% fall in the previous session, as extended output cuts by Opec and its allies helped underpin prices despite growing concerns about weak demand.
US soyabean futures fell on Tuesday on concerns that Chinese demand for imported soya would waver due to hog herd losses caused by the African swine fever, but saw a slight recovery on Wednesday. The Chicago September soyabean oil contract fell 1.1% on Tuesday, and was last trading flat around 1014 GMT on Wednesday.
Meanwhile, the September soyaoil contract on the Dalian Commodity Exchange eased 0.2% and the Dalian September palm oil contract fell 1%. Palm oil prices are impacted by movements in soyaoil, as they compete for a share in the global vegetable oils market.
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