Palm demand slumps to two-month low

Malaysian palm futures dropped?to a 2-month low on Wednesday due to sluggish demand by key destination buyers.

Benchmark palm oil contract for July delivery on the Bursa Derivatives Exchange?was down by 41 ringgit or 0.91% at 4,440 Ringgit ($1,130.35), the lowest price since March 10.

Paramalingam Supramaniam is the director of?brokerage Pelindung Bestari. He said that there are concerns about the market's lack of demand, especially from India and China.

He said that "Indian buyers have switched to buying soybean oil from Argentina. China, on the other hand, has stepped back from local purchases and shown more interest in forward purchasing, especially for December delivery."

He added that this has created a void in demand for the "near-term" market.

Solvent Extractors' Association of India, based in Mumbai, said that India's palm oils imports fell 26% to their lowest level in four months in April due to a weakening institutional demand. A price rally which reduced palm oil's discounted to other oils also discouraged refiners to increase purchases.

Dalian's palm oil contract dropped 1.28%, while the most active soyoil contract declined 0.04%. Soyoil prices at the Chicago Board of Trade rose by 0.11%.

As palm oil competes to gain a piece of the global "vegetable oils" market, it tracks the price movement of its rival edible oils.

Oil prices fell, ending a three-day rally. Investors awaited developments in the Middle East 'ceasefire' and prepared for a high stakes summit between U.S. president Donald Trump and China’s Xi Jinping.

Palm oil is less attractive as a biodiesel feedstock due to the weaker crude oil futures.

The palm?ringgit MYR= currency of trade strengthened by 0.1% against the US dollar, increasing the price for buyers with foreign currencies.

(source: Reuters)