VEGOILS-Palm slips tracking weaker soyoil prices
Malaysian palm futures fell on Thursday as a result of lower soyoil costs, and also because trade talks between China and the United States were likely to be in focus.
At the midday break, the benchmark palm oil contract on Bursa Derivatives exchange for delivery in November fell 26 ringgit (or 0.58%) to 4,462 Ringgit ($1,061.12) per metric ton. 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 0.8%. Chicago Board of Trade soyoil prices were down by 0.49%.
As palm oil competes to gain a share in the global vegetable oil market, it tracks the price fluctuations of competing edible oils.
Crude oil fell as investors assessed the future of U.S. fuel consumption as the summer driving season draws to a close, and also assessed potential shifts in crude supply as India is facing punishing U.S. duties for importing Russian petroleum.
Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.
The palm ringgit's trade currency strengthened by 0.14% versus the dollar. This made the commodity slightly cheaper for buyers who hold foreign currencies.
Technical analyst Wang Tao stated that palm oil could retest its support level of 4,455 Ringgit per metric tonne. A break below this mark would trigger a drop to 4,421 Ringgit.
(source: Reuters)
