SINGAPORE: Malaysian palm oil futures fell for a second straight session to a two-week closing low on Wednesday, mirroring losses in rival oils.
The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange fell 101 ringgit, or 2.38% to 4,135 ringgit ($874.39) a metric ton at closing, the lowest close since March 13.
Softer rival oils brought palm oil prices lower, said Mitesh Saiya, trading manager at Mumbai-based trading firm Kantilal Laxmichand & Co. Soft oils’ discounts to crude palm oil have created export worries for key producers Malaysia and Indonesia, he said.
The soyoil contract on the Dalian Commodity Exchange fell 2.14%, while its palm oil contract lost 2.38%. Soyoil prices on the Chicago Board of Trade decreased 1.53%.
Soybean and corn futures fell amid plentiful supply, with the markets looking ahead to data on US planting and grain stocks, due on Thursday, that could move prices.
Palm oil is affected by price movements in related oils as they compete for a share of the global vegetable oils market. Oil prices fell for a second day, dropping more than 1% on Wednesday on surging US stockpiles and signs that the OPEC+ producer group is unlikely to change its output policy at a technical meeting next week.
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock. The Malaysian ringgit, palm’s currency of trade, weakened 0.28% against the dollar, limiting losses. A weaker ringgit makes palm oil more attractive for foreign currency holders. Malaysian benchmark crude palm oil prices are expected to weaken from second quarter this year on higher vegetable oil supply globally, Fitch Ratings said on Wednesday, noting that mild weather conditions and lower fertiliser costs will support output growth and sustain pressure on prices over the next 12-18 months.
Malaysia’s financial markets will be closed on Thursday for a public holiday. Trading will resume Friday.
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