VEGOILS-Palm oil tracks rival soyoil lower
Malaysian palm futures declined on Monday due to the weakness of rival Dalian and Chicago soybean oil prices, which was a result of concerns over China's slow purchase of U.S. soya beans.
By midday, the benchmark palm oil contract on Bursa Derivatives Exchange for February delivery fell by 57 ringgit or 1.37% to 4,095 Ringgit ($996.84).
The Farm Trade in Kuala Lumpur, a consulting and trading firm, said that the uncertainty over China's bean purchases keeps pressure on the soy complex. With current loading, it is unlikely China will reach their initial purchase targets as per the agreement with the U.S. by December.
According to a Tuesday shipping schedule, the U.S. is accelerating its exports of crops to China after a tariff war that slowed trade for several months. At least six bulk vessels are scheduled to load soybeans in Gulf Coast terminals by mid-December.
The slow pace has led to fears that Beijing may fall short of the 12 million tons of soya bean purchases that the U.S. Cabinet members had forecast by the end this year. Beijing hasn't confirmed the target.
Dalian's palm oil contract, which is the most active contract, dropped by 0.28%. Chicago Board of Trade soyoil prices fell by 0.41%.
As palm oil competes to gain a share in the global vegetable oils industry, it tracks the price changes of competing edible oils.
Oil prices were near their two-week highs Monday, as investors awaited a possible U.S. rate cut in this week that would boost economic growth and increase energy demand. They also monitored geopolitical risks that threatened Russian and Venezuelan supplies.
Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.
According to Wang Tao, technical analyst, palm oil could retest the resistance level of 4,192 ringgit a ton. A break above this mark would lead to an increase to 4,291 ringsgit.
(source: Reuters)
