Palm oil prices fall due to weak Indian demand and competition from soyoil

Malaysian palm futures fell on Thursday due to a weakening of demand from India, and the growing pressure from soyoil.

By midday, the benchmark palm oil contract on Bursa Derivatives Exchange for January delivery was down 13 Ringgit or 0.29% at 4,499 Ringgit ($1,064.85) per metric ton.

According to Paramalingam Supramaniam of brokerage Pelindung Bestari, the market fell after news that India's imports of palm oil had fallen to a four month low. Meanwhile, cheaper soybeans, and soybean oil, squeezed demand for Palm Oil.

The Solvent Extractors' Association of India reported that India's palm oils imports dropped in September to their lowest level since May, as refiners switched to soyoil which is cheaper and whose shipments reached a three-year high.

Dalian's palm oil contract, which is the most active contract in Dalian, fell by 0.28%. Chicago Board of Trade soyoil prices were up by 0.63%.

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

Oil prices rose around 1% early in the morning after U.S. president Donald Trump announced that Indian Prime Minister Narendra modi had promised his country to stop buying oil from Russia. Russia supplies approximately one-third its imports.

Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.

The palm ringgit's trade currency strengthened by 0.09% in relation to the dollar. This made the commodity slightly cheaper for buyers who hold foreign currencies.

Technical analyst Wang Tao stated that palm oil is neutral between 4,484 and 4,530 ringgits per metric ton. An escape from this range could indicate a direction.

(source: Reuters)