SINGAPORE: Malaysian palm oil futures snapped a two-day winning streak to fall on Thursday, as the contract tracked weaker Chicago soyoil and crude prices, while a stronger ringgit also added to the decline.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange closed down 22 ringgit, or 0.56%, to 3,941 ringgit ($837.62) a metric ton.
Dalian’s most-active soyoil contract ended daytime trade 0.08% higher, while its palm oil contract gained 0.49%.
Soyoil prices on the Chicago Board of Trade fell 0.62% as of 1000 GMT as soybeans extended their downward trend.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Improving seasonal palm production, coupled with better demand from India on account of palm being conductively priced versus competing oils has brought about “an equilibrium in markets”, said Pranav Bajoria, director at Singapore-based brokerage Comglobal Pte Ltd.
Palm oil rises to track higher rival softs and crude
Key palm importer, India’s palm oil imports rose by 11.6% in May from the previous month to reach the highest level in four months as its discount over rival oils led to higher purchases, a trade body said in a statement on Thursday.
Malaysian palm oil looks to be trading within a range of 3850 ringgit to 4050 ringgit per ton, with “palm being about $100 discounted to crude soybean on a CNF basis”, Bajoria added.
Oil prices slipped on Thursday as investors digested that the U.S. Federal Reserve had likely pushed back an interest rate cut to December and as U.S. crude and fuel stocks rose.
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
The Malaysian ringgit, palm’s currency of trade, strengthened 0.21% against the dollar. A stronger ringgit makes palm oil less attractive for foreign currency holders.
Another key palm importer China’s agriculture ministry said on Thursday that recent high temperatures have had an adverse impact on summer planting and fighting drought and protecting summer planting is arduous.
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