Palm oil hits a two-week low due to weaker Dalian crude oil and Mideast uncertainty

Malaysian palm futures fell to their lowest level in two weeks Wednesday. This was due to lower crude oil prices, a decline in Dalian oil, and uncertainty over the prospects of de-escalation of the Middle East conflict.

The benchmark contract for palm oil delivery in June on the Bursa Derivatives exchange fell 41 ringgit or 0.9% to 4,496 Ringgit ($1,134.78).

Paramalingam Supramaniam of Selangor brokerage Pelindung Bestari said that the decline in crude prices and Dalian had a negative impact on 'the palm market'. The sentiment is still largely influenced by crude oil, with little regard for fundamentals.

Supramaniam added, "Everything depends on the crude oil sentiment and ongoing talks around negotiations to end war between Iran and U.S.

Reports that the United States had sent Iran a 15-point plan to end the Middle East war lowered oil prices by about 4%. This raised the prospect of a ceasefire which could ease disruptions in supply in the region.

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

Officials in the industry said that a weak demand was also impacting prices. Indian vegetable oil refineries have curtailed purchases of palm, soyoil and sunflower oils, betting on the fact that Iran's war will not be able to sustain a price rise.

Dalian's most active soyoil contract dropped 0.67% while its "palm oil" contract shed 1.74%. Chicago Board of Trade soyoil prices were down by 0.09%.

As it competes for a share of global vegetable oil market, palm oil monitors the 'price movements' of competing edible oils.

Exports of Malaysian palm oil products between March 1-25 rose between 38.4% to 50.6% from one month to the next, according cargo surveyors.

The palm?ringgit (the currency of trade) fell 0.23% in relation to the dollar. This made the commodity a little cheaper for foreign currency buyers.

(source: Reuters)