Palm slips on weaker crude, soyoil; robust demand limits fall

KUALA LUMPUR: Malaysian palm oil futures fell for a second straight session on Tuesday, pressured by weaker crude oil prices and soyoil prices, although robust demand limited the fall.

The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange slid 30 ringgit, or 0.64%, to 4,643 ringgit ($1,135.76) a metric ton at the close. Over the last two sessions, the contract lost 1.67%.

In line with the decline in crude oil and Chicago soyoil prices, the crude palm oil futures market also succumbed to selling pressure, said Paramalingam Supramaniam, director of the Selangor-based brokerage Pelindung Bestari.

However, July’s export figures look promising while production has only marginally picked up so far, he said.

“I think this sell-off will ultimately result in good buying interest, both in the local and export markets,” he added.

Cargo surveyors estimated that exports of Malaysian palm oil products for July 1-25 rose between 8.1% and 15.9% from a month earlier.

Dalian’s most-active soyoil contract fell 1.21%, while its palm oil contract shed 1.22%. Soyoil prices on the Chicago Board of Trade were down 1.05%.

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

Oil prices extended losses, hitting their lowest levels in more than a week as hopes for a resolution to the U.S.-Iran conflict grew and traders continued to assess developments in the Middle East.

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

The ringgit, palm’s currency of trade, weakened 0.15% against the dollar, making the commodity slightly cheaper for buyers holding foreign currencies.