Palm oil slams Dalian palm oil that is weak, and the strong ringgit

The price of Malaysian palm oils futures fell to its lowest level in three weeks Monday. Dalian palm oil was a major factor, as well as a stronger ringgit. Market participants were waiting for new triggers that would confirm the direction.

By midday, the benchmark palm oil contract on Bursa Derivatives Exchange for January delivery had fallen 23 ringgit (0.52%) to 4,399 Ringgit ($1,041.43) per metric ton, the second consecutive decline.

A Kuala Lumpur based trader stated that "Today crude palm oil futures are still tracking Dalian's performance while waiting for new market leads such as the weather conditions and (possible improvement) in US-China Trade talks this week."

Dalian's palm oil contract, which is the most active contract in Dalian, lost 0.31%. Chicago Board of Trade soyoil prices rose by 0.97%.

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

Intertek Testing Services, a cargo surveyor, said that exports of Malaysian products containing palm oil for the period October 1-25 decreased by 0.4% from September 1-25 to 1,283,814 tons.

Oil prices increased after U.S. officials and Chinese officials drew up a framework for a trade deal, assuaging fears that tariffs or export restrictions between the two world's largest oil consumers would dent global growth.

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

The dollar strengthened by 0.17% versus the ringgit. Palm oil becomes more expensive when the ringgit strengthens.

Technical analyst Wang Tao says that palm oil is set to fall from its current level of 4,409 ringgit a ton to 4,346 ringgit.

MARKET NEWS

The dollar weakened as the risk appetite was boosted by signs of an easing in trade tensions, particularly between China and the U.S. This week will be highlighted by the central bank meetings and earnings from megacap companies.

Data/Events 0900 Germany Ifo Business Climate Oct 0900 Germany Ifo Currency Conditions Oct 0900 Germany Ifo Expectations Oct 1100 France Unmp Class-A SA Sept 1230 US Durable Goods September ($1 = 4.22240 ringgit).

(source: Reuters)