Palm extends its losses as soyoil and crude oil prices fall
Malaysian palm futures dropped to a 10-week-low on Monday. Pressured by lower soyoil prices and crude oil, fears of a trade war arose from China's retaliatory duties on U.S. products.
The benchmark contract for palm oil delivery in June on Bursa Derivatives exchange fell 146 ringgit or 3.37% to close at $4,182 Ringgit ($934.32) per metric ton. Earlier in the session, the contract reached a low of 4163 ringgit. This was its lowest level since 24 January. The contract has fallen 6.84% in three sessions.
Anilkumar bagani, head of commodity research at Mumbai-based Sunvin Group, said that crude palm oil futures fell, following a sharp drop in Chicago soyoil prices and a fall in energy prices. China's announcement to retaliate with 34% tariffs on U.S. products triggered a collapse of equity and commodity markets.
Bagani stated that OPEC’s decision to increase crude oil production combined with U.S. president Donald Trump’s impositions of tariffs have adversely impacted crude prices and created bearish macroeconomic circumstances.
Dalian's palm oil contract, which is the most active contract, fell by 5.39%. Chicago Board of Trade soyoil prices were down by 2.18%.
As palm oil competes to gain a share in the global vegetable oils industry, it tracks the price changes of competing edible oils.
The oil prices continued to fall, dropping nearly 4% as escalating tensions in trade between the United States, China and other countries stoked concerns about a possible recession, which would lower demand for crude. Meanwhile, OPEC+ is preparing an increase in supply.
Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.
Malaysian palm oil stocks also fell, and major companies suffered significant losses. The biggest fallers were TH Plantations Berhad, which fell 9.73%. FGV Holdings Berhad, Sarawak Oil Palms, and Sarawak Oil Palms, with losses of 6.48%, and 5.69%, respectively.
The dollar has weakened by 0.95%, making palm cheaper for foreign currency buyers. ($1 = 4.4760 ringgit)
(source: Reuters)
