VEGOILS-Palm falls tracking weaker soyoil prices

Malaysian palm futures declined on Thursday due to weaker soyoil and possible trade talks between China and the United States.

At the close, the benchmark palm oil contract on Bursa Derivatives Exchange for November delivery fell 40 ringgit or 0.89% to 4,448 Ringgit ($1,057.79). The contract increased by 0.4% during the previous session.

According to Paramalingam Supramaniam of brokerage Pelindung Bestari, the market has traded lower because soyoil is continuing to decline. Traders are closely monitoring the upcoming Sino U.S. Trade talks to see if China will increase their soybean purchases from the U.S.

A spokesperson for the United States Government said this week that Li Chenggang, a senior Chinese trade negotiator, would be traveling to Washington to meet with U.S. government officials this week. The two superpowers are looking to chart a new path after their current tariff truce.

"Weaker-than-expected production in Malaysia this month, as well as robust export demand, is keeping (palm oil) prices supported," Supramaniam said.

Dalian's palm oil contract, which is the most active contract, fell by 1.09%. Chicago Board of Trade soyoil prices were down by 0.3%.

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

Oil prices fell on Monday after rising the previous session. This was due to the expectation of lower U.S. demand for fuel with the end of summer travel season, and the restart of Russian supplies to Hungary and Slovakia via the Druzhba Pipeline.

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

The palm ringgit's trade currency strengthened by 0.43% against dollars, making it slightly more expensive to buyers who hold foreign currencies.

(source: Reuters)