JAKARTA: Malaysian palm oil futures closed lower on Wednesday, erasing last session’s gains, dragged down by rival edible oils in the Dalian and Chicago markets and the worsening economic anxieties over tariff wars.
The benchmark June palm oil contract on the Bursa Malaysia Derivatives Exchange fell 42 ringgit, or 1%, to 4,146 ringgit ($922.56) a metric ton at the close.
“Price movements are currently driven by market sentiment and broader economic anxieties, particularly surrounding the ongoing tariff wars,” said Darren Lim, commodities strategist at Singapore-based brokerage Phillip Nova.
“As the global markets wrestle with uncertainty, the vegetable oils sector, including palm oil, has been swept up in the downward momentum.” Dalian’s most-active soyoil contract fell 0.89%, while its palm oil contract slipped 1.9%. Soyoil prices on the Chicago Board of Trade (CBOT) lost 0.71%.
Palm oil tracks the price movements of rival edible oils as it competes for a share of the global vegetable oils market. Indonesia will adjust its crude palm oil export tax to reduce the burden of US tariffs on exporters, Finance Minister Sri Mulyani Indrawati said on Tuesday.
Oil prices fell to a four-year low on Wednesday in its worst five-day losing streak in three years, while several commodities, including base metals, tumbled as the trade war between China and the US is set to intensify. Weaker crude oil futures make palm a less attractive option for biodiesel feedstock. The ringgit, palm’s currency of trade, weakened 0.11% against the US dollar, making the commodity cheaper for buyers holding foreign currencies.
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