SINGAPORE: Malaysian palm oil futures reversed course to fall on Tuesday on weaker rival oils and lower export expectations in June, although a weaker ringgit limited losses.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange fell 14 ringgit, or 0.36%, to 3,905 ringgit ($827.33) a metric ton by midday break.
Dalian’s most active soyoil contract slid 1.23%, while its palm oil contract lost 2.38%, as of 0535 GMT.
Soyoil prices on the Chicago Board of Trade slipped 0.69%. Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
The US corn and soybean crops are in great shape early in the growing season, and although there is plenty of time for fortune to turn, this year’s harvest is already in good company, according to Karen Braun, a market analyst for Reuters.
Crude oil prices dipped on Tuesday, as investors waited for key US inflation data and the outcome of the Federal Reserve’s policy meeting to glean a clearer picture of where inflation is heading, and how that will affect fuel demand.
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
While a weak ringgit is currently supporting palm oil prices, lower Malaysian exports expected in June have “capped the gains for upside” in the near term, said Mitesh Saiya, trading manager at Mumbai-based trading firm Kantilal Laxmichand & Co.
Malaysian palm oil falls on lower June exports estimates
The Malaysian ringgit, palm’s currency of trade, weakened 0.02% against the dollar to extend its 0.66% decline on Monday.
A weaker ringgit makes palm oil more attractive for foreign currency holders.
Palm oil may fall this week towards the support levels of 3,850-3,870 ringgit per ton, with resistance at 3,980-4,000 ringgit, LSEG said in a report published on Monday.
Comments