KUALA LUMPUR: Malaysian palm oil futures traded lower on Monday, weighed by weakness in Dalian palm olein. The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange slid 71 ringgit, or 1.41%, to 4,982 ringgit ($1,115.79) a metric ton at the midday break.
The contract rose 2.5% in the previous session. The weakness seen in the palm market today stems from spread adjustment against Dalian’s palm olein, a Kuala Lumpur-based trader said.
Dalian’s most-active soyoil contract fell 1.35%, while its palm oil contract lost 0.84%. Soyoil prices on the Chicago Board of Trade were up 0.15%. Palm oil tracks price movements of rival edible oils, as they compete for a share of the global vegetable oils market.
The ringgit, palm’s currency of trade, strengthened 0.07% against the dollar, making the commodity more expensive for buyers holding foreign currencies.
Oil prices edged up after fighting between Russia and Ukraine intensified over the weekend, although concerns about fuel demand in China, the world’s second-largest consumer, and forecasts of a global oil surplus weighed on markets.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
Chicago soy futures rose for a second session on concerns that China’s removal of export incentives for used cooking oil, a low-cost feedstock that many US biofuels makers use instead of domestically produced soyoil, could curtail imports.
Palm oil may revisit its Nov. 11 high of 5,202 ringgit per metric ton, as the strong gain from the Nov. 14 low of 4,826 ringgit suggests a resumption of the uptrend, Reuters technical analyst Wang Tao said.
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