Malaysian palm oil futures were lower on Thursday evening, tracking the weakness in rival edible oilseeds and recording a second straight day of losses. The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange fell 1.5 percent to 2,705 ringgit ($639.48) a tonne at the close of trade.
Traded volumes stood at 63,814 lots of 25 tonnes each in the evening. "The heavy drop in China palm olein and weakness in rival oilseed soya dampened market sentiment," said a Kuala Lumpur based futures trader, referring to palm olein on China's Dalian Commodity Exchange and soyaoil on the US Chicago Board of Trade. China soyabean oil futures fell over 2 percent on Thursday, reaching their lowest level in three months, following a drop in global prices and amid ongoing pressure from large stocks.
A palm oil trader in Kuala Lumpur said Dalian's palm olein decline could be due to profit-taking ahead of a week-long long holiday. China's announcement on Monday that it would start acutioning soyabeans its from state reserves could also weigh on trading sentiment, said traders. Palm oil prices are affected by the performance of related edible oils such as soya, as they compete for a share of the global vegetable oils market.
Buyers would usually switch to soyaoil if its spread with palm oil narrows, as it is perceived to be of better quality. The December soyabean oil contract on the Chicago Board of Trade was down 0.4 percent, while the January soyabean oil contract on the Dalian Commodity Exchange fell 1.6 percent. In other related oils, the January palm olein contract dropped as much as 2.6 percent.
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