Palm oil drops on Dalian and Chicago Exchanges due to weakness in soyoil

Malaysian palm futures continued to lose on Thursday, wiping out the gains of the previous session, as the contract tracked the losses in soyoil futures at Dalian and Chicago.

By midday, the benchmark palm oil contract on Bursa Malaysia's Derivatives exchange had fallen 48 Malaysian Ringgits, or 1.07% to 4,427 Malaysian Ringgit ($1,055.56) per metric ton.

A Kuala Lumpur based trader stated that "today's futures track on weakness from both Dalian markets and Chicago market, with soyoil being under focus due the decline and no orders for new soybean crop."

According to a Brazilian judge's decision, he rejected a farmer group's request to overturn an injunction relating to the ban.

Brazil's two-decade soy moratorium was created as a private agreement to protect the Amazon Rainforest by prohibiting soybean traders from purchasing from farmers that cleared land in the Amazon after July 2008.

In the meantime, the U.S. Environmental Protection Agency released a proposal on Tuesday for reallocating the biofuel blend obligations waived by the Small Refinery Exemption program (SRE) to large refineries.

Dalian's palm oil contract, which is the most active contract, fell by 2%. Chicago Board of Trade Soyoil Prices fell 0.62%.

As palm oil competes to gain a share in the global vegetable oils industry, it tracks the price fluctuations of competing edible oils.

Chicago soybean futures declined for the second session in a row, pressured down by a weaker soyoil following a disappointing U.S. proposal on biofuels.

Intertek Testing Services reports that exports of palm oil products from Malaysia for the period September 1-15 increased 2.6% over August 1-15. AmSpec Agri Malaysia is an independent inspection company and states they decreased 0.1%.

The palm ringgit's trade currency, the dollar, fell by 0.17%, making the commodity more affordable for buyers who hold foreign currencies.

Technical analyst Wang Tao stated that palm oil could test support at the current price of 4,429 Ringgit per metric tonne. A break below this level would open the door to the range between 4,366 ringgit and 4,401 ringgit.

(source: Reuters)