Palm oil falls over 1% due to weak demand and soft crude oil

Malaysian palm futures closed'more than 1% lower' on Thursday. This reversed gains made in the previous session.

At the close, the benchmark contract for palm oil delivery in August on the Bursa Derivatives Market was down 75 Ringgit or 1.6% at 4,602 Ringgit ($1,147.63).

David Ng, a proprietary trading at Kuala Lumpur's Iceberg X Sdn. Bhd, explained that the market was lower due to a?weakness of soybean oil and crude crude oil prices in Asian hours. Recent softness in crude Palm oil demand also weighed on the market.

Dalian's most active palm oil contract dropped 1.59%, while the soyoil contract that was most active fell 0.63%. Chicago's Board of Trade reported a 0.19% decline in soyoil.

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

Exports of Malaysian Palm Oil Products for May were estimated to have fallen between 8.8% and 15% compared to a month ago.

Oil prices dropped after a ceasefire agreement between Israel and Lebanon raised hopes of a wider?agreement that would end the U.S./Israeli war against Iran, which could lead to the reopening of Strait of Hormuz.

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

Palm's trade currency, the ringgit (?0.5% of the dollar), has weakened against the dollar making the commodity more affordable for buyers with foreign currencies.

A survey shows that Malaysian palm oil inventories are likely to increase?for the second consecutive month in May, as slowing exports will outweigh lower production, according to the study. ($1 = 4.0100 ringgit)

(source: Reuters)