Palm oil charts third weekly loss on demand woes

SINGAPORE/KUALA LUMPUR: Malaysian palm oil futures charted a third consecutive week of declines on Friday evening on concerns over demand from top buyers China and India, though prices reversed some losses to end the trading day slightly higher.

Abundant supplies in key consumers of the tropical product are expected to weigh on the market, although the downside is limited, traders said.

The benchmark third-month palm oil contract on the Bursa Malaysia Derivatives Exchange was up 0.15 percent at 2,066 ringgit ($505.26) a tonne by the end of the trading day.

Earlier in the session, it dropped to its weakest since mid-December at 2,038 ringgit a tonne.

"There is some scope for prices to decline, but as soon as the third-month contract drops below 2,000 ringgit a tonne, buying will kick in," said one Singapore-based trader who supplies palm oil to India.

Palm oil is down 2.8 percent this week, and has shed 2.6 percent since the start of the month.

European nations were cutting down on palm oil consumption due to environmental concerns.

The European Commission says palm oil cultivation causes deforestation and its use in transport fuel should be phased out, putting it on a collision course with big palm oil producers like Malaysia and Indonesia.

The Commission published its criteria on Wednesday for determining what crops cause environmental harm, part of a new EU push to boost the share of renewable energy to 32 percent by 2030 and determine appropriate renewable sources.

In related oils, Chicago soybean oil was down 0.3 percent and the soyoil contract on the Dalian Commodity Exchange dropped 1.5 percent.