Malaysian palm oil futures stretched their losses into a second straight session on Thursday to hit a four-day low, tracking weak crude and competing vegetable oil prices. Palm oil prices have come under pressure in the absence of an expected pick-up in imports by key consumer China ahead of Lunar New Year celebrations in February. A slowdown in growth in the world's No 2 economy and ample world supplies of rival soyoil have curbed the country's demand for the tropical oil.
The palm oil contract for April on the Bursa Malaysia Derivatives Exchange slid 1.3 percent to 2,424 ringgit ($554.31) per tonne at the close of trade - its lowest this week. Traded volume stood at 47,443 lots of 25 tonnes each. "Palm oil is down as soyoil on the Chicago Board of Trade closed down yesterday night. There's also uncertainty in China's economy and weak crude oil prices," said a trader based in Kuala Lumpur, adding that palm's further slide in the afternoon was due to falling Asian equities.
With China's economic growth cooling to its slowest pace in 25 years, its demand for most commodities has been hit. The country is the world's No 2 consumer of palm oil after India. Cargo surveyor data on Wednesday showed shipments from Malaysia over January 1-20 dropped 8-10 percent month on month, a sharper fall than traders had anticipated.
Analysts, however, say a persistent supply glut will continue pressuring the market. Lower crude prices make palm oil less attractive for blending into biodiesel. Palm oil may slide to 2,430 ringgit, before rising again, as suggested by its wave pattern and a Fibonacci projection analysis, said Reuters market analyst for commodities and energy technicals Wang Tao. The US March soyoil contract was down 0.4 percent, while the May soybean oil contract on the Dalian Commodity Exchange fell 0.9 percent.
Comments
Comments are closed.