Palm oil drops on weaker exports and a decline in rival oils
Malaysian palm futures fell on Monday, following a drop in rival oils. Weakness in palm oil exports from Malaysia in February also affected sentiment.
By midday, the benchmark contract for palm oil delivery in May on Bursa Malaysia's Derivatives exchange had fallen 67 ringgit or 1.47% to 4,487 Ringgit ($1,005.60 per metric tonne).
Anilkumar bagani, the head of research for Mumbai-based Sunvin Group's vegetable oil brokerage, said that "the futures mirror a sell-off on Chicago's soybean futures and South American markets Friday night as well as weakness in Dalian palm olein futures and soyoil in Asian hours."
The market also followed the lower performance of Malaysian palm oil in February.
Dalian's palm oil contract, which is the most active contract in Dalian, lost 0.4%. The Chicago Board of Trade's (CBOT's) soyoil price fell by 0.14% from the Friday closing level, but then reversed direction to trade up by 0.32%.
As palm oil competes to gain a market share on the global vegetable oils, it is affected by price fluctuations in other oils.
According to AmSpec Agri Malaysia, an independent inspection company and cargo surveyor Intertek Testing Services, the exports of palm oil products from Malaysia in February fell by 8.5%-11%.
A trade ministry official announced on Friday that Indonesia had lowered the crude palm oil benchmark price in March to $954.50 a ton, but the export tax would remain at $124 per ton.
Oil prices rose on Monday, as positive manufacturing data from China led to renewed optimism about fuel demand. However, uncertainty loomed over a potential Ukraine peace agreement and the global economy growth due to possible U.S. Tariffs.
Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.
Technical analyst Wang Tao stated that the price of palm oil could retest its support level at 4,473 Ringgit per metric tonne, since wave c, which started from 4,624 Ringgit, looks incomplete.
(source: Reuters)
