Palm oil falls more than 1% due to weaker competitor oils and geopolitical tensions

After a long Eid holiday, Malaysian palm oils futures ended more than 1% lower on Tuesday. Weaker edible 'oils from rival countries weighed heavily on the market. The 'Middle East war also kept traders on edge.

At the close, the benchmark palm oil contract on Bursa Malaysia's Derivatives exchange for June delivery fell 72 ringgit or 1.56% to 4,539 Ringgit ($1,148.24).

A Kuala Lumpur based trader stated that price movements in the?Dalian Palm olein? and Chicago soybean oil? kept palm futures within a?relatively tight range.

The trader said, "Geopolitical uncertainties kept market participants on the sidelines after U.S. president Donald Trump claimed that U.S.-Iran had a productive?conversation. But Tehran denied any negotiations took place."

Dalian's palm oil contract, which is the most active contract in Dalian, fell by 1.79% while soyoil prices dropped by 0.97%. Chicago Board of Trade soyoil fell by 0.55%.

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

The Middle East conflict shows no signs of ending, and oil prices are rising on fears about supply.

Palm oil is a more attractive option as a biodiesel feedstock due to the stronger crude oil futures.

The palm ringgit's currency has weakened by 0.43% versus the dollar. This makes the commodity cheaper for buyers who hold foreign currencies.

Industry officials say that Indian'vegetable oil refineries' are reducing their purchases of palm, soyoil, and sunflower oils, betting on the fact that the price rally caused by the Iran conflict will not last, and they can replenish stock after the conflict ends. Reporting by Ashley Tang, Editing by Sumana Nandy and Harikrishnan Nair; Sahal Muhammed.

(source: Reuters)