Malaysian palm oil futures fell more than 3% on Tuesday

Malaysian palm oil futures fell more than 3% on Tuesday, snapping a four-day rally, as weaker prices for rival Chicago soybean oil and crude weighed on the market after a ceasefire agreement between Israel and Iran eased tensions in the region.

The benchmark FCPO1 palm oil contract for September delivery on the Bursa Malaysia derivatives exchange fell 140 ringgit, or 3.39%, to close at 3,986 ringgit ($940.09) a tonne, its biggest daily drop since April 4.

Crude palm oil prices fell, tracking weakness in the Chicago soybean oil and crude markets amid easing tensions in the Middle East, said David Ng, a proprietary trader at Kuala Lumpur-based trading firm Iceberg X Sdn Bhd. Ng sees support at RM3,900 a tonne and resistance at RM4,150 a tonne.

The most-active Dalian soybean oil contract fell 2.21%, while the CPO1 palm oil contract fell 2.14%. Chicago Mercantile Exchange soybean oil prices fell 2.14%.

Palm oil follows the price movements of rival edible oils as they compete for share in the global vegetable oil market.

Oil prices extended their decline to hit a two-week low on Tuesday after Israel agreed to US President Donald Trump’s ceasefire proposal with Iran, allaying fears of supply disruptions in the Middle East.

Weaker crude oil futures make palm oil a less attractive option as a biodiesel feedstock.

Indonesia exported 1.78 million tonnes of palm oil, including refined products, in April, down from 2.18 million tonnes a year earlier, according to the Indonesian Palm Oil Association.

India’s June soybean oil imports are likely to fall 18% from the previous month to a four-month low as congestion at a key port forces ships to unload in July instead of June.

The ringgit, the palm oil trading currency, strengthened 1.21% against the dollar, making the commodity more expensive for buyers holding foreign currencies.

($1 = RM4.2400)

Tags: prices, palm oil