Palm oil prices fall sharply on the back of weaker rival oils and crude prices

The price of palm oil in Malaysia fell more than 3% Tuesday, ending a four-day rise, due to the weaker Chicago soyoil prices and crude oil after the ceasefire agreement between Israel and Iran.

The benchmark contract for palm oil delivery in September on Bursa Derivatives Malaysia Exchange fell 140 ringgit or 3.39% to 3,986 Ringgit ($940.09) per metric ton, its largest daily drop since April 4.

David Ng is a proprietary trader with Kuala Lumpur's Iceberg X Sdn. Bhd. He said that the prices of crude palm oil fell due to the weakness in the Chicago crude oil and soybean oil markets, as well as the easing Middle East tensions.

Dalian's palm oil contract, which is the most active contract, fell by 2.14%. Chicago Board of Trade soyoil fell by 2.14%.

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

Oil prices fell to a new two-week low after Israel accepted the proposal of U.S. president Donald Trump for a ceasefire between Iran and Israel, easing concerns over disruptions to supply in the Middle East.

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

Data from the Indonesia Palm Oil Association revealed that Indonesia exported 1,78 million tons (including refined products) of palm oil in April. This is down from 2,18 million tons one year ago.

India's imports of soyoil in June will likely fall 18% from the previous month to a 4-month low due to congestion at one key port, which will cause vessels to be unloaded into July rather than June.

The palm ringgit's trade currency strengthened by 1.21% in relation to the dollar. This made the commodity more costly for buyers who hold foreign currencies. ($1 = 4.2400 ringgit)

(source: Reuters)