Palm ends at two-week low on weaker rival oils, posts third weekly drop
Malaysian palm oil futures ended at a two-week low on Friday, posting their third straight weekly drop, hit by weaker rival edible oils and poor import margins in key markets hurting demand.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange closed down 74 ringgit, or 1.7%, at 4,255 ringgit ($1,020.38) a tonne, its lowest closing since Sept. 2. Palm fell 0.54% for the week.
The decline was due to a bearish momentum in global vegetable oils and top consumer India’s hike in fortnightly import tariffs, making palm less competitive against sunflower and canola oils, said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
“Given the heavy selloff in Bursa Malaysia today and overall downward correction in global vegetable oil complex, we expect importers to stay away from palm oil buying for the time-being.”
Soyoil prices were down 0.6% on the Chicago Board of Trade BOcv1. Dalian’s most-active soyoil contract DBYcv1 fell 2.5%, while its palm oil contract DCPcv1 eased 3.9%.
The Chinese market was quiet amid negative import margins and ahead of long holidays, Bagani said. The Dalian will be closed from Saturday and will resume trade on Wednesday.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
The Malaysian Human Resources Ministry said in a statement on Thursday that it has approved the entry of 32,000 foreign workers for the entire plantation industry, raising hopes that it would help alleviate a labour shortage that has hurt palm oil production.
“In Indonesia, traders are estimating slower palm oil production growth in remaining 2021 period, but we believe the lower production pace has been priced in and the lower biodiesel production numbers are bearish for the market,” Bagani said.
Source: Reuters (Reporting by Mei Mei Chu; Editing by Devika Syamnath and Rashmi Aich)