Palm surrenders early gains on Dalian weakness
Malaysian palm oil futures gave up early gains to log a second straight session of declines on Thursday, weighed down by losses in rival Dalian oils and Indonesia’s smaller biodiesel blend plan.
The benchmark palm oil contract FCPOc3 for February delivery on the Bursa Malaysia Derivatives Exchange fell 0.48% to end the afternoon trade at 3,950 ringgit ($898.75) per tonne. It had risen rose as much as 2.19%earlier in the day.
Palm was dragged down by a “very weak” Dalian market, a trader in Kuala Lumpur said.
Dalian’s palm oil contract DCPv1 fell 2.01%, while the most active soyoil contract DBYv1gained 0.24%. Soyoil prices on the Chicago Board of Trade BOc2 climbed 0.71%.
Palm oil is affected by price movements in related oils, as they compete for a share in the global vegetable oils market.
Meanwhile, Indonesia’s preparation to roll out biodiesel containing 35% palm oil-based fuel (B35) also weighed on prices, said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
“Even though the percentage of blend would go higher, (it is) still down in comparison to earlier projections of B40,” he said.
Indonesia is currently has a mandatory B30, which contains 30% palm oil-based fuel, and finalising trials for fuel with 40% palm oil blend. There is no detail yet from the government about the rollout of B35.
Source: Reuters (Reporting by Fransiska Nangoy; editing by Uttaresh.V, Subhranshu Sahu and Savio D’Souza)