Palm oil falls to a 5-week low due to weakness in crude and rival edible oils

The price of Malaysian palm oils fell to a five-week high on Tuesday as the weaker crude oil and competing edible oils weighed down on the market. The benchmark palm oil contract for?June on the Bursa Derivatives Exchange fell 87 ringgit or 1.91% to 4,468 Ringgit ($1,131.43) per metric ton. This was its lowest close since March 10.

A Singapore-based analyst stated that the market was softer because of external pressures. Crude oil fell due to?a easing geopolitical risks as discussions around a potential Iran deal raised hopes?that disruptions in supply could be resolved.

This is also affecting the?overall sentiment for vegetable oils, as Dalian and Chicago soybean oil are both down." Brent crude oil fell?0.84% at $98.53 per barrel by 1014 GMT.

Palm oil is less attractive as a biodiesel feedstock due to weaker crude oil futures. Dalian's palm oil contract lost 1.68% while the most active soyoil contract dropped 0.48%. Chicago Board of Trade soyoil prices were down by 0.62%.

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

On Wednesday, cargo surveyors will release their estimates for exports of Malaysian palm oil products from April 1-15.

Analyst said that 'the market expects exports will slow down following the high pace of March. India's palm imports fell by nearly 19% in March, month-over-month. The rally in tropical oil price prompted refiners not to purchase the oil. The ringgit, the palm oil's trade currency, gained 0.6% in value against the dollar. This made the commodity more costly for buyers with foreign currencies.

(source: Reuters)