Palm oil drops over 1% due to crude weakness and softer competitor oils

Malaysian palm oil futures dropped more than 1% Tuesday, due to lower crude oil prices and competition from edible oils.

By midday, the benchmark palm oil contract for June delivery on the 'Bursa Malaysia derivatives exchange had fallen 81 ringgit or 1.78% to $4,474 ringgit (1,132.66 USD) per metric ton. A Singapore-based analyst who is not authorized to speak to the media said that the market was softer because of external pressures. Crude oil fell due to easing geopolitical risks as discussions around a potential?Iran agreement raised expectations about supply disruptions being resolved.

This is also affecting the overall sentiment towards vegetable oils, as Dalian and Chicago soybean oil are both down. Brent crude, the benchmark oil, fell 0.99% at $98.38 per barrel as of?0617 GMT.

Palm oil is less appealing as a biodiesel source due to the weaker crude oil futures.

Dalian's most active?palm oil contract dropped 1.62%, while the soyoil contract that was most active fell 0.73%. Chicago Board of Trade soyoil prices were down by 0.78%.

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

On Wednesday, cargo?surveyors will release their estimates for exports of Malaysian palm oils products from April 1-15.

Analysts said that the market expects exports will slow after the high pace of March. India's palm oil imports fell nearly 19% in March, month-on-month. They also hit a new low for the past three months after a rise in tropical oil prices prompted refiners not to purchase.

The palm currency, the ringgit, has strengthened by 0.5% against dollars, increasing the price of the commodity for foreign-currency buyers. Technical analyst Wang Tao believes that palm oil could'stabilise at a support level of 4,458 ringgit a metric ton, and then start a rebound.

(source: Reuters)