Palm oil drops 3% as Argentina lifts soyoil export tax
- Soyoil prices on the Chicago Board of Trade were down 1.59%
KUALA LUMPUR: Malaysian palm oil futures fell more than 3% on Tuesday, after top soyoil exporter Argentina temporarily scrapped its export tax, making soyoil cheaper than palm oil.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange slid 162 ringgit, or 3.65%, to 4,281 ringgit ($1,020.26) a metric ton by the midday break, after a 0.41% rise in the previous session.
The Argentina news triggered a massive selloff in the Chicago and Dalian markets that has spread to the palm oil market, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
On Monday, Argentina temporarily eliminated export taxes on grains and their by-products, looking to speed up sales abroad and rake in much-needed dollars to prop up the flagging peso currency.
The suspension runs through the end of October, or until exports reach $7 billion. Losses in palm oil were limited by a slowdown in September production in Malaysia and expectations that the monsoon will reduce yields in the fourth quarter, Supramaniam said.
The duty-free exports have made Argentine soyoil shipments cheaper than palm oil, not only for African buyers but also for buyers in India, said a Mumbai-based trader.
Dalian’s most-active soyoil contract fell 3.76%, while its palm oil contract shed 3.88%.
Soyoil prices on the Chicago Board of Trade were down 1.59%.
Palm oil tracks price movements of rival edible oils, as it competes for a share of the global vegetable oils market.
Oil prices declined for a fifth consecutive session, as a preliminary agreement reached between Iraq and Kurdish regional governments to restart a pipeline added to oversupply concerns.
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
Palm oil may extend losses to 4,309 ringgit per ton, driven by a wave C, Reuters technical analyst Wang Tao said.