Palm oil drops on the weaker crude oils; crude gains 1.7% this week

Malaysian palm oil futures were lower on Friday as they tracked weaker rival edible oils from the Dalian and Chicago Exchanges, as well a crude oil. However, they still posted a weekly gain.

The benchmark palm-oil contract for December delivery at Bursa Derivatives Exchange dropped 38 ringgit or 0.77% to 4,898 Ringgit ($1,200.49), a metric tonne, as of the close. The contract rose 1.74% in the last week.

A Kuala Lumpur based trader said that "FCPO futures were in the negative on Friday. This mirrored selling pressure across the broader commodity complex throughout Asian trading hours."

Dalian's palm oil contract suffered a loss of 2.14%, while the most active soyoil contract dropped by 1.57%. Prices of soyoil on the Chicago Board of Trade fell by 0.77%.

As it competes to gain a share in the global vegetable oil market, palm oil tracks rival edible oils.

The trader said that market participants were watching for an announcement by the Indian government regarding a possible reduction in import duties, which could impact demand for palm oil from Malaysia.

The oil price fell by 2% on the Friday, continuing its losses for a second straight session. This was due to easing concerns regarding?Saudi disruptions in supply outweighing concerns about an expansion of conflict throughout?the Middle East.

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

An analyst said that the palm oil production in Indonesia's main producing region Kalimantan could drop by?12-15% during the fourth quarter due to prolonged dry weather conditions and widespread fires.

The palm?ringgit?, the currency of trade for the company, gained 0.49% in value against the US Dollar, increasing the price of the product to buyers with foreign currencies.

(source: Reuters)