Palm oil is a weaker competitor to other oils

The price of Malaysian palm oils futures dropped for the second session in a row on Tuesday. This was due to weaker edible oils from rival producers and concerns over U.S. tariff policies.

By midday, the benchmark contract for palm oil delivery in May on the Bursa Derivatives exchange fell 59 ringgit or 1.31% to 4,440 Ringgit ($1,002.71) per metric ton.

David Ng, a proprietary trading at Kuala Lumpur's Iceberg X Sdn. Bhd., explained that the market was down because of soybean oil's overnight drop and Dalian weakness. This was primarily due to U.S. and China tariffs, as well as lower crude oil prices.

Dalian's palm oil contract, which is the most active contract, fell by 2.64% while soyoil prices dropped by 1.72%. Chicago Board of Trade soyoil prices were down by 0.09%.

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

The oil prices dropped for a second consecutive day due to fears that U.S. Tariffs on Canada Mexico and China will slow down economies in the world, and harm energy demand. Meanwhile, OPEC+ is increasing its supply.

Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.

The palm ringgit's trade currency, the dollar, has weakened by 0.16%, lowering the price of the commodity for buyers who hold foreign currencies.

Exports of palm oil products from Malaysia between March 1-10 were estimated to have fallen by 25.8% to 38.3% compared to the same period one month earlier.

Indonesian prosecutors have handed over illegal palm oil plantations that were seized in an ongoing corruption investigation to a state-owned firm.

Technical analyst Wang Tao stated that palm oil could fall to 4,360 ringgit a ton as it has failed to break the resistance of 4,642 ringgit.

(source: Reuters)