Palm oil prices are down by more than 2% due to a weaker demand for exports and Chicago soyoil.
Malaysian palm futures dropped more than 2% Wednesday due to a weaker Chicago soyoil price and sluggish demand for exports.
The benchmark contract for palm oil delivery in February on the Bursa Derivatives exchange lost 107 Ringgit or 2.17% to $4,817 Ringgit ($1,077.87), a metric tonne, at the close. The contract gained 0.51% during the last session.
David Ng said that the market fell on a weaker export demand, and a decline in Chicago soybean oil, according to a proprietary trader with Kuala Lumpur's trading firm Iceberg X Sdn. Bhd.
Exports of palm oil from Malaysia between Nov. 1-20 fell between 1.4% to 5.3%, according to cargo surveyors.
Dalian's palm oil contract, which is the most active contract, rose by 0.79%. Chicago Board of Trade soyoil prices were down 1.65%.
As rival edible oils compete to gain a share of global vegetable oil market, palm oil monitors the price movement of their competitors.
The price of oil was stable for the second day, as data showed that U.S. crude stockpiles were rising and concerns over an escalating conflict in Ukraine affecting Russian crude supply offset signs of a growing Chinese crude imports.
Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.
The palm ringgit's trade currency strengthened by 0.04% versus the dollar. This made the commodity more costly for buyers who hold foreign currencies.
A circular posted on the Malaysian Palm Oil Board's website revealed that Malaysia increased its December export tax to 10%, and its reference price was raised to 4,471.39 Ringgit per ton.
(source: Reuters)
