Palm oil falls as Indonesia abandons B50 plans and rival oils weaken

Malaysian palm futures fell for the third consecutive session on Thursday, due to weaker edible oil and crude oil prices.

By midday, the benchmark contract for palm oil delivery in March on the Bursa Derivatives exchange fell 23 ringgit or 0.57% to 4,017 Ringgit ($992.34) per metric ton.

Anilkumar bagani, the head of commodity research at Sunvin Group in Mumbai, said that during Asian hours, crude palm oil futures were followed by sharply lower Chinese soyoil and Chicago vegetable oil futures, along with a decline in crude oil.

Bagani stated that Indonesia's decision not to pursue its B50 biodiesel plan has also resulted in a reduction of the palm oil premium.

Indonesia has scrapped plans to introduce a B50-grade palm oil-based fuel this year. Instead, it will stick with B40 due to technical and financial concerns.

Bagani stated that the market was waiting for data on palm oil production in January's first half and export performance.

Later in the day, cargo surveyors will release their estimates of exports for January 1-15.

Dalian's soyoil contract, which is the most active in Dalian, fell by 0.55% while palm oil contracts dropped by 2.19%. Prices of soyoil on the Chicago Board of Trade fell by 1.06%.

Palm oil monitors the price changes of competing edible oils as it competes for a share of global vegetable oils.

Oil prices fell more than 2% when U.S. president Donald Trump stated that the killings of protesters in Iran were "stopping", easing concerns about military action and disruptions to supply.

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

Technical analyst Wang Tao believes that palm oil could fall to the low of 3,967 Ringgit per ton on January 5, as it has broken its rising trendline.

(source: Reuters)