VEGOILS - Palm drops more than 1% after Indonesia abandons B50 plans and rival oils weaken

Malaysian palm futures dropped more than 1% on Thursday, for the?third consecutive session. This was due to weaker edible oils from rivals, lower crude oil prices and Indonesia's decision to cancel its "B50" biodiesel plan.

At the close, the benchmark contract for palm oil delivery in March on the Bursa Derivatives exchange fell 60 ringgit or 1.49% to 3,980 Ringgit ($982.23) per metric ton.

Anilkumar Bagani, the head of commodity analysis at Sunvin Group in Mumbai, said that during Asian hours, crude palm oil futures were impacted by sharply lower Chinese?soyoil and Chicago vegetable oil futures, as well as a decline in crude oil.

Bagani stated that Indonesia's decision not to pursue its B50 biodiesel plan has led to a reduction in the palm oil premium.

Indonesia has scrapped its plans to introduce a mandatory B50 palm oil-based fuel grade 'this year. Instead, it will stick with B40 due to funding and technical concerns.

Bagani stated that the market was waiting for data on palm oil production in January's first half and export performance.

Exports of Malaysian palm oil products rose between 17.5% to 18.6% in the period January 1-15, according to cargo surveyors.

Dalian's palm oil contract, which is the most active contract, fell by 2.03%. Chicago Board of Trade Soyoil Prices were down 0.98%.

Palm oil monitors the price changes of other edible oils as it competes to gain a share in the global vegetable oils market.

Oil prices fell from multi-month highs while gold dropped from a record-high after U.S. president Donald Trump appeared to back away from threats of a potential U.S. war against Iran. This dampened investor demand for safe haven assets.

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

(source: Reuters)