Palm snaps winning streak of four sessions on strong ringgit and India demand concerns
On Tuesday, Malaysian palm oils futures fell for a first time in five sessions due to a stronger ringgit as well as concerns about demand after India, the world's largest buyer of palm oil, cancelled import contracts.
By mid-day, the benchmark palm oil contract on Bursa Derivatives Exchange for December delivery fell 20 ringgit (0.5%), to 3,957 Ringgit ($948.92) per metric ton. The contract has risen 6.5% over the last four sessions.
Refiners in India cancelled orders for 100,000 metric tons palm oil due to be delivered between October and December. The government increased import duties because of a rise in prices overseas, which prompted them book profits.
A Mumbai-based trader at a global trading house said that "Indian buyers have backed out of deals. This shows that people will switch cooking oils if the prices continue to rise."
The palm ringgit's trade currency strengthened by 0.71% to a three-year high against the U.S. Dollar, making the commodity costlier for buyers with foreign currencies.
Mitesh Saida, a Mumbai based trader, believes that the upcoming festive season, combined with lower inventories in major importing countries will limit any price drop.
Dalian's palm oil contract, which is the most active contract, rose by 0.61%. Chicago Board of Trade soyoil prices were down by 0.24%.
As they compete to gain a share in the global vegetable oil market, palm oil monitors prices of competing edible oils.
The price of crude oil rose Tuesday amid concerns that the intensifying Israel/Hezbollah war could impact Middle East supply.
Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.
Malaysia's plantations ministry said that a proposal for a revision of the windfall profits levy in the palm oil sector was sent to the Finance Ministry last week, according to a report by the state news agency Bernama on Monday.
Technical analyst Wang Tao stated that palm oil could test resistance at 4,067 Ringgit per metric tonne. A break above this level would open the door to 4,120-4153 ringgit.
(source: Reuters)
