Palm extends its losses as concerns about demand weigh
Malaysian palm futures continued to fall on Friday. They hit a new low of three weeks, as the sluggish market outweighed worries about supplies of sunflower oil from the Black Sea region, which is the largest producer, and gains in soft oils.
The benchmark contract for palm oil delivery in November on Bursa Derivatives exchange was down 21 Ringgit (0.55%) at $3,831 Ringgit ($888.45). The contract is down 1.7% this week.
A Mumbai-based trader said that palm oil has been struggling to recover, despite the gains made by soyoil. Sunoil supply is also a concern.
The demand for palm oil is not encouraging a recovery.
Ukraine accused Russia of using strategic bombers on Thursday to strike a civilian grain ship in Black Sea waters near NATO-member Romania, raising concern over the supply of sunoil.
Dalian's soyoil contract that is most active rose by 0.84% while palm oil contract fell by 0.1%. Chicago Board of Trade Soyoil rose 0.42%.
As they compete to gain a share of the global vegetable oil market, palm oil monitors price movements for related oils.
The trader stated that the increase in India's export tax and the reduction of Indonesia's import taxes were even more concerning for the palm oil market.
India's palm oil imports in August fell by more than a quarter when compared with July.
The Malaysian Ringgit, which is the currency used to trade palm oil, increased 0.5% in value against the US dollar. Palm oil becomes less appealing to foreign currency holders when the ringgit is stronger.
The oil prices continued to rise on Friday as a result of the disruptions of production in the Gulf of Mexico.
Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.
According to technical analyst Wang Tao, palm oil could bounce between 3,906 and 3,916 before reaching support at 3,796. $1 = 4.3120 Ringgit (Reporting and editing by Sonia Cheema, Sumana Nady).
(source: Reuters)
