Palm oil demand falls due to poor demand in key markets
The price of Malaysian palm oils futures dropped for the third session in a row on Tuesday due to a lackluster demand from major destination markets.
By midday, the benchmark contract of Bursa Derivatives Exchange fell 67 ringgit or 1.41% to 4,691 Ringgit ($1,055.11) per metric ton.
Anilkumar bagani, the commodity research director at Mumbai-based Sunvin Group, stated that futures were under pressure due to lower overnight Chicago Soyoil Futures and a lack of new demand from destination markets, particularly in India.
Paramalingam Supramaniam is the director of Selangor brokerage firm Pelindung Bestari. He said that prices plummeted following a massive liquidation of funds. This trend, it's believed, will continue over a long period.
The market will remain under pressure until we see a return of genuine buying interest on the cash market. This is due to the bumper crop in America and the book closing for year-end.
He said that fundamentals like weaker production, and the possibility of ending stocks falling below 1.5 million metric tonnes by February did not ease market sentiment.
Dalian's palm oil contract, which is the most active contract, fell 1.4% while soyoil prices dropped 0.46%. Chicago Board of Trade soyoil prices were up by 0.19%.
As they compete to gain a share of the global vegetable oil market, palm oil monitors price changes in rival edible oils.
The palm ringgit's trade currency strengthened by 0.09% against dollars, increasing the price of the commodity for buyers who hold foreign currencies.
The oil prices fell further on Tuesday, as China's economic statistics re-invigorated demand concerns. Investors remained cautious in advance of the U.S. Federal Reserve interest rate announcement.
Technical analyst Wang Tao stated that palm oil could break support at 4,701 Ringgit per metric tonne and fall to 4,626 Ringgit.
(source: Reuters)