SINGAPORE: Malaysian palm oil futures finished lower on Wednesday, as a sharp drop in crude prices weighed on sentiment, while profit-taking and the off-loading of positions ahead of the long weekend added pressure.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange fell 59 ringgit, or 1.56%, to 3,730 ringgit ($840.09) by the end of trading, paring earlier gains.
In the previous session, the contract had posted its biggest daily gain since December.
The market is taking a breather after two days of hefty gains. Profit-taking and some squaring of positions could play into a lower market ahead of the long weekend, said Sathia Varqa of Fast Markets Palm Oil Analytics.
Oil prices dropped sharply on Wednesday, sliding by 2% as potential US interest rate hikes that could slow growth and curb oil consumption outweighed strong Chinese economic data and falling US inventories.
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
Soyoil prices on the Chicago Board of Trade were down 1.13%. Dalian’s most-active soyoil contract inched 0.13% higher, while its palm oil contract rose 1.9%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Traders are assessing whether the Black Sea grain corridor deal would be extended beyond May 18 after recent concerns.
The European Parliament approved a landmark deforestation law on Wednesday that will ban imports into the European Union (EU) of coffee, beef, soy and other commodities if they are linked to the destruction of the world’s forests.
Meanwhile, Malaysia’s exports in March fell 1.4% on the year, a smaller decline than analysts expected, government data showed on Wednesday.
Exports of Malaysian palm oil products for April 1-15 fell 20.7% to 566,995 tonnes from 715,230 tonnes shipped during March 1-15, cargo surveyor Societe Generale de Surveillance said.
Indian buyers have opted to cancel 75,000 tonnes of palm oil purchases for the first time in many years and switch to rival soft oils, such as sunflower oil and soyoil, five industry officials told Reuters.
The ringgit, palm’s currency of trade, gained 0.18% against the dollar, making the commodity more expensive for holders of foreign currency.
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