Malaysian palm oil futures fell on Monday, retracing from a two-month high reached in the previous session, as slow demand for palm and weak crude oil prices capped gains. The February benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange lost 1.6 percent to end the trading day at 2,402 ringgit ($555.50) a tonne. The contract closed 2.7 percent higher on Friday at 2,441 ringgit.
Traded volume stood at 38,812 lots of 25 tonnes each. "Demand is still not coming in, that's the main reason why the market is softer today. Crude oil has also been rather depressed and this will keep a lid on prices for a while," said a Kuala Lumpur-based trader.
"The market should come off until we see some consistent demand coming in." Palm oil shipments from Malaysia, the world's second largest producer, dropped 12.4 percent to 1.5 million tonnes in November, according to government data last Thursday. Cargo surveyors also reported a 33-35 percent drop in exports for Malaysian palm oil products in the first ten days of December compared with the same time period a month ago.
Crude oil fell for a seventh straight session on Monday, the longest losing streak since mid-2014, as the International Energy Agency's (IEA) forecast of rising supplies put pressure on prices. Both benchmark futures for crude oil have fallen since the Organisation of the Petroleum Exporting Countries (Opec) abandoned its output ceiling on December 4. Palm is influenced by crude oil prices, as the tropical oil is used for blending into biodiesel, a substitute for crude oil. In competing vegetable oil markets, the May soybean oil contract on the Dalian Commodity Exchange gained 0.4 percent.
Comments
Comments are closed.