KUALA LUMPUR: Malaysian palm oil futures fell for the third consecutive session on Tuesday, pressured by weak demand from key destination markets.
The benchmark Bursa Malaysia Derivatives Exchange contract fell by 34 ringgit, or 0.71%, to 4,724 ringgit ($1,058.01) per metric ton at the close.
Futures came under pressure from a drop in overnight soybean oil futures in Chicago and a lack of new demand from destination markets amid deeply negative import margins, especially in India, said Anilkumar Bagani, head of commodity research from Mumbai-based Sunvin group.
Paramalingam Supramaniam, director of Selangor-based brokerage Pelindung Bestari, said prices plummeted following a massive and prolonged sell-off by funds, a trend that is believed to continue for an extended period.
“Until we see a possible return of bona fide buying interest in the spot market, coupled with the bumper harvest in the US with year-end book closing, the market will remain under selling pressure.
“Fundamentals such as weaker production and the possibility of ending stocks falling below 1.5 million metric tons in February did little to ease market sentiment,” he said.
Palm recovers thanks to Dalian oils, stronger rivals, and weakening ringgit
Dalian’s most active soybean oil contract fell 0.23%, while its palm oil contract lost 1.2%. Soybean oil prices on the Chicago Board of Trade rose 0.07%.
Palm oil follows the price movements of rival edible oils as they compete for share of the global vegetable oil market.
The ringgit, palm’s commercial currency, weakened 0.34% against the dollar, making the product cheaper for buyers holding foreign currencies.
Oil prices fell as economic data from China renewed concerns about demand, while investors remained cautious ahead of the US Federal Reserve’s interest rate decision.
