Palm drops over 1% due to Dalian palm olein weakening

The market was pressured by the weaker Dalian palm olein, which caused the Malaysian palm oil futures to fall more than 1%.

By midday, the benchmark palm oil contract for July delivery at the Bursa Derivatives exchange had fallen 70 ringgit or 1.55% to 4,446 Ringgit ($1,130.72). The contract increased by 0.24% during the previous session.

A Kuala Lumpur based trader reported that the market was affected by selling pressure on?Dalian Palm Olein during Asian trading. Dalian's palm oil contract lost 1.35%, while the most active?soyoil fell 0.04%. Prices of soyoil on the Chicago Board of Trade rose by 0.37%.

Palm oil follows the price movement of rival edible oils as it competes to gain a share in the global vegetable oils market. Oil prices rose by nearly 1% after talks to end the U.S. and Israeli war against Iran appeared fragile. Tehran's response a Washington proposal highlighted stark differences which have kept supply worries alive.

Palm oil is a better option as a biodiesel source because crude oil futures are stronger. Malaysian palm oil inventories increased in April for the first four months, as exports dropped amid an increase in production and imports. Cargo surveyor, Intertek Testing Services, estimated that Malaysian palm oil exports for May 1-10 were up 8.5% compared to a month ago. Meanwhile, a reputable independent inspection company AmSpec Agri Malaysia said that exports declined 10.8%.

The palm currency, the ringgit (0.31%) has weakened against the dollar. This makes the commodity slightly cheaper for buyers who hold foreign currencies. Technical analyst Wang Tao believes that palm?oil could break through a support level at 4,482 Ringgit per metric tonne and drop into the range of 4,410-4452 Ringgit.

(source: Reuters)