Palm extends losses on weak rival oils, crude oil prices, April demand concerns

KUALA LUMPUR: Malaysian palm oil futures extended their decline for a second straight session on Wednesday, slipping more than 1%, pressured by weaker rival edible oils and crude oil prices as well as concerns over April export demand.

The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange slid 71 ringgit, or 1.55%, to 4,510 ringgit ($1,154.04) a metric ton by the midday break.

Crude palm oil futures are weighed down by selling pressure in crude oil, Chicago soyoil, and the Dalian markets, while growing concerns over April demand add to the pressure, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.

“Freight costs have risen exponentially higher, and this has led to demand tapering and a build-up of processed oil stocks in storage tanks,” he said.

Dalian’s most-active soyoil contract fell 0.88%, while its palm oil contract shed 2.08%. Soyoil prices on the Chicago Board of Trade were down 1.59%.

Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market.

Oil prices fell more than $2 per barrel to pare some of Tuesday’s sharp gains after the Iraqi government and Kurdish authorities reached a deal to resume oil exports via Turkey’s Ceyhan port, providing modest relief to concerns about Middle East oil supplies.

Weaker crude oil futures make palm oil a less attractive biodiesel feedstock.

The ringgit, palm’s currency of trade, strengthened 0.31% against the dollar, making the commodity more expensive for buyers holding foreign currencies.

Global edible oil markets are behaving unpredictably as energy supply disruptions from the Middle East war lift hopes for biodiesel demand, though subdued buying from major importers has clouded the price outlook, industry veteran Dorab Mistry said.

Palm oil may test support at 4,519 ringgit per metric ton, a break below which could open the way toward the 4,417-4,468 ringgit range, Reuters technical analyst Wang Tao said.