VEGOILS-Palm falls tracking weaker soyoil, crude oil prices
Malaysian palm futures declined on Monday for the third consecutive session. They were weighed down on lower soyoil prices and crude oil, while China's retaliatory duties on U.S. products raised fears of an international trade war.
At midday, the benchmark palm oil contract on Bursa Derivatives exchange for June delivery fell 57 ringgit or 1.32% to 4,271 Ringgit ($957.62).
Anilkumar bagani, head of commodity research at Mumbai-based Sunvin Group, said that crude palm oil futures fell, following a sharp drop in Chicago soyoil prices and falling energy costs. China's announcement to impose 34% tariffs in retaliation on U.S. products triggered a collapse of equity and commodity markets.
Bagani said that OPEC’s decision to increase crude oil production, combined with U.S. president Donald Trump’s impositions of tariffs, have adversely impacted crude prices and created bearish macroeconomic circumstances.
Dalian's palm oil contract, which is the most active contract, fell 5.09% while soyoil prices dropped 3.65%. Chicago Board of Trade soyoil prices were down by 1.51%.
As palm oil competes to gain a share in the global vegetable oils industry, it tracks the price changes of competing edible oils.
Oil prices fell more than 3% this week, deepening the losses of last week as trade tensions between China and the United States escalated, causing fears that a recession would lower demand for crude.
Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.
The palm ringgit's trade currency, the dollar, fell by 0.59%, making the commodity more affordable for buyers who hold foreign currencies.
A survey shows that Malaysian palm oil stocks rose in March for the first six-month period as production recovered. However, global demand is still sluggish due to economic concerns.
Technical analyst Wang Tao believes that the wave pattern of palm oil suggests it may return to its low price of 4,230 ringgit a metric ton on March 26.
(source: Reuters)
