Palm extends its losses into a second day due to weak demand

Malaysian palm oil futures fell more than 1% in price on Wednesday as the prices were pressured by a subdued demand.

By midday, the benchmark?palm-oil contract?for delivery in July on the Bursa Malaysia Derivatives Exchange had fallen 62 ringgit (1.38%) to 4,419 Ringgit ($1,125.86). The previous session saw a drop of 0.78%.

Paramalingam Supramaniam, Director at brokerage Pelindung Bestari, says that the market is concerned about the lack demand from India and China.

He said that "Indian buyers have switched to Argentinian soybean oil,?while China is stepping back and showing greater interest in forward buying, especially for December delivery." He said that this has led to a shortage of demand in the short-term.

Dalian's most-active palm oil contract fell 0.96%, but its soyoil contract remained unchanged at RMB 8,547. Chicago Board of Trade Soyoil Prices were down by 0.52%.

Palm oil follows the price movement of other edible oils as it competes to gain a share in the global vegetable oils markets. Oil prices halted a rally of three days as investors awaited developments in the Middle East ceasefire, and prepared for a high-stakes meeting between U.S. president Donald Trump and Chinese president Xi Jinping.

Palm oil is less attractive as a biodiesel source due to weaker crude oil futures. By May 10, the European Union's soybeans imports, which run from July to?August, had fallen by 9% compared to a year ago. Data from the European Commission showed that palm oil imports were down 4% to 2.47 million metric tons.

The palm currency, the ringgit (RMB), strengthened by 0.18% versus the dollar. This made the commodity more costly for buyers who held foreign currencies. Technical analyst Wang Tao stated that palm oil could 'bounce' into a range between?4,517 and 4,537 ringgit for a metric ton after stabilising around the support of 4,432 ringgit.

(source: Reuters)