Palm tracks on Chicago Soyoil Lower as Lack of Fresh Demand Weighs

Malaysian palm oils futures continued to lose on Wednesday as they tracked the weakness of rival soyoil in Chicago, and a lack of new demand.

By midday, the benchmark contract for palm oil delivery in March on the Bursa Derivatives exchange had fallen 49 ringgit or 1.1% to 4,388 Ringgit ($974.25) per metric ton.

The lack of demand for futures will continue to be a problem in the coming two-to-three months, until March, according to Paramalingam Supramaniam at Selangor's brokerage Pelindung Bestari.

The Chicago Board of Trade reported a 0.3% drop in soyoil. Dalian's soyoil contract was the most active, rising 0.21% while palm oil fell 1.38%.

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

A leading trade group reported that India's palm oils imports fell 41% in December, month-on-month, to a new nine-month-low, after prices reached a two-and-a-half-year high, prompting refiners stock up on soyoil, which was available at a discounted price.

The cargo surveyors estimate that Malaysian palm oil exported fell between 21.4% to 26.8% from Jan. 1-10 compared with a month ago.

After falling on Tuesday the oil prices were not much different. A drop in U.S. crude stocks and an expectation of disruptions to supply due to sanctions against Russian tankers provided support, along with forecasts for a lower global fuel demand.

Palm oil is a better option as a biodiesel feedstock due to the higher crude oil futures.

The Malaysian Ringgit, the palm industry's currency, has fallen slightly in value against the U.S. Dollar, making it cheaper for buyers with foreign currencies.

According to Wang Tao, a technical analyst, the market has lost momentum at resistance levels of 4,521 ringgit and is no longer aiming for a bullish target price of 4,646 Ringgit per metric tonne.

(source: Reuters)