Palm oil follows Dalian and Chicago oils in lowering prices

The market was pressured by the weakness of rival oils Dalian and Chicago, as well as a weak demand from India, which is a major buyer.

By midday, the benchmark contract for palm oil delivery in May on the Bursa Derivatives exchange had fallen 73 ringgit or 1.57% to 4,591 Ringgit ($1,044.36) per metric ton.

A Kuala Lumpur based trader said that sharp losses in rival oils had dampened the market's sentiment.

Dalian's palm oil contract, which is the most active contract in Dalian, fell by 2%. Chicago Board of Trade soyoil prices were down by 0.7%.

As palm oil competes to gain a share in the global vegetable oils industry, it tracks the price changes of competing edible oils.

The head of a trade body has said that India's palm-oil imports for the marketing year 2024/25 ending in October may fall as low as 7.5 millions tons, which would be the lowest level in five years. This is because the price premium on palm oil over other oils such as soyoil or sunflower oil is pushing refiners to look at cheaper alternatives.

Four trade sources reported that Indian refiners cancelled orders for 100,000 tonnes of crude palm oil due for delivery in March to June, citing a rise in Malaysian benchmark prices and negative margins for refining in India.

Two government sources say that India will likely raise import taxes on vegetables oils for the second consecutive time in less six months in order to support the thousands of oilseeds farmers who are suffering from a collapse in domestic oilseeds prices.

Chan Foong-Hin, the deputy commodities minister, said that Malaysian palm oils exports to China would "remain resilient" despite their higher price than rival oils and Chinese buyers' changing buying patterns.

Palm oil could fall below the rising channel and to 4,583 Ringgit per ton after failing to break through resistance.

(source: Reuters)