Palm oil falls by over 3% due to weak Chicago soyoil and crude oil prices
After U.S. president Donald Trump announced the ceasefire agreement between Israel and Iran, Malaysian palm futures dropped more than 3%, ending a four-day rally. They were pressured by lower rival Chicago soyoil prices and crude oil, as well as the weaker Chicago oil and soyoil.
At the midday break on the Bursa Derivatives Exchange, the benchmark palm oil contract, for September delivery, lost 126 Ringgit or 3.05% to 4,000 Ringgit ($940.73) per metric ton, its largest daily loss since April 7.
David Ng is a proprietary trader with Kuala Lumpur's Iceberg X Sdn. Bhd. He said that the prices of crude palm oil fell due to the weakness in the Chicago crude oil and soybean oil markets, as well as the easing Middle East tensions.
Dalian's palm oil contract also fell by 2.07%. Chicago Board of Trade soyoil prices fell 1.05%.
As palm oil competes to gain a share in the global vegetable oil market, it tracks the price changes of competing edible oils.
After Trump's announcement of a ceasefire, oil prices dropped sharply, reaching their lowest level in over a week. This eased concerns about supply disruptions in Middle East, a region that produces a lot of oil.
Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.
Data from the Indonesia Palm Oil Association revealed that Indonesia exported 1,78 million tons (including refined products) of palm oil in April. This is down from 2,18 million tons one year ago.
India's imports of soyoil in June will likely fall 18% from the previous month to a 4-month low due to congestion at one key port, which will cause vessels to be unloaded into July rather than June.
The palm ringgit's trade currency strengthened by 0.93% against dollars, increasing the price of the commodity for buyers who hold foreign currencies.
Technical analyst Wang Tao stated that palm oil could break the support of 4,066 Ringgit per ton and fall toward 4,017 Ringgit.
(source: Reuters)
