Palm oil prices drop 3% after Argentina removes the export tax on soyoil
The price of palm oil futures in Malaysia fell by more than 3% after the top exporter of soyoil, Argentina, temporarily removed its export tax. This made soyoil less expensive than palm oil.
After a slight rise of 0.41% in the previous session, the benchmark palm oil contract on Bursa Derivatives Malaysia Exchange for December delivery fell 162 ringgit or 3.65% to 4,281 Ringgit ($1,020.26) per metric ton at the midday break.
Paramalingam Supramaniam is the director of Selangor brokerage Pelindung Bestari. He said that the Argentina news caused a massive sell-off on the Chicago and Dalian market. This spread to the palmoil market.
Argentina eliminated temporarily export taxes on grain and its by-products Monday. The aim was to boost sales abroad, and to raise much-needed dollar to support the faltering peso. The suspension will last until the end of October or until exports hit $7 billion.
Supramaniam reported that losses in palm oil had been limited due to a slowdown of production in Malaysia in September and the expectation that monsoon would reduce yields during the fourth quarter.
A Mumbai-based trader said that the duty-free exports made Argentinean soyoil shipments less expensive than palm oil. This was true not only for African customers, but also for Indian buyers.
Dalian's palm oil contract, which is the most active contract, fell by 3.88%. Chicago Board of Trade soyoil prices were down by 1.59%.
As palm oil competes to gain a share in the global vegetable oil market, it tracks price changes of competing edible oils.
The oil prices fell for the fifth session in a row, after a preliminary deal was reached between Iraqi and Kurdish regional government to restart a pipeline. This agreement added to concerns about oversupply.
Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.
Technical analyst Wang Tao stated that the wave C could drive palm oil losses up to 4,309 Ringgit per ton.
(source: Reuters)
