Palm oil falls on weaker Dalian oil, Sino-US Tariff War
Malaysian palm oils futures ended lower on Tuesday due to weaker Dalian oils, and fears over China's response to new U.S. duties on Chinese products.
The benchmark May palm oil contract on Bursa Derivatives Exchange dropped 137 ringgit or 3.06% to close at $4,347 ringgit (US$973.79) per metric ton. This was the lowest close for nearly a whole month.
China had retaliated swiftly against new U.S. import tariffs earlier in the day. It raised import levies on $21 billion of American agricultural and foodstuffs and moved the world's two largest economies closer to a full-blown trade war.
"China has taken countermeasures to U.S. agricultural exports and increased uncertainty on the global vegetable oil market, which has scared traders," said Paramalingam Supramaniam of Selangor brokerage Pelindung Bestari.
Palm oil contracts in Dalian fell 3.08%, while soyoil prices dropped 0.9%. The Chicago Board of Trade's (CBOT), which trades soyoil, saw a 0.55% drop in prices.
As palm oil competes to gain a share in the global vegetable oils industry, it tracks the price changes of competing edible oils.
A survey shows that Malaysian palm oil inventories will fall to their lowest level in almost three years in February due to production disruptions from floods.
According to dealers, India's palm-oil imports increased 36% month-on-month in February, after dropping to their lowest level since March 2011, in January.
The oil prices continued to fall following reports that OPEC+ would increase production in April, and the U.S. tariffs against Canada, Mexico, and China, along with Beijing's retaliatory duties.
Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.
(source: Reuters)
