MUMBAI: Malaysian palm oil futures extended losses to a second session on Friday, hitting a three-week low, on a strong ringgit and as sluggish demand outweighed concerns over sunflower oil supplies from the top-producing Black Sea region.
The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange closed down 39 ringgit, or 1%, at 3,813 ringgit ($887.16) a metric ton. The contract lost 2.2 this week.
Palm oil is struggling to recover despite overnight gains in soyoil and concerns over sunoil supplies, said a Mumbai-based trader.
“Demand is not supporting a recovery in palm oil.”
Ukraine accused Russia on Thursday of using strategic bombers to strike a civilian grain vessel in the Black Sea waters near NATO member Romania, raising concerns over sunoil’s supply.
The Chicago Board of Trade soyoil edged down 0.7%.
Palm drops tracking losses in rival oils, rising stocks
Palm oil tracks price movements in related oils as they compete for a share in the global vegetable oils market.
“The potential increase in India’s import duty and Indonesia’s reduction in export taxes are even greater concerns for the (palm oil) market,” the trader said.
Meanwhile, India’s August palm oil imports fell more than a quarter compared to July.
The Malaysian ringgit, the palm’s currency of trade, rose 0.8% against the dollar. A stronger ringgit makes palm oil less attractive for foreign currency holders.
Oil prices rose on Friday, extending a rally sparked by output disruptions in the U.S. Gulf of Mexico.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
Palm oil may bounce into a range of 3,906 ringgit to 3,916 ringgit before testing support at 3,796 ringgit, according to Reuters’ technical analyst Wang Tao.
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