Palm oil declines amid weaker rival oils, stronger ringgit

Malaysian palm oil futures fell on Tuesday, extending losses amid prolonged weakness in rival edible oils and a stronger ringgit, although higher crude oil prices capped losses.

The benchmark palm oil contract FCPOc3 for April delivery on the Bursa Malaysia Derivatives Exchange fell 60 ringgit, or 1.52%, to 3,888 ringgit ($822.68) a metric ton by the midday break.

“Palm is following the weakness in soft oils,” said Pranav Bajoria, director of Singapore-based brokerage Comglobal Pte Ltd.

Dalian’s most-active soyoil contract DBYcv1 tumbled 2.97%, while its palm oil contract DCPcv1 dropped 2.17%. Soyoil prices on the Chicago Board of Trade BOcv1 fell 0.42%.

Chicago soybean futures touched a two-year low, weighed down by improving supply expectations from South America and concerns about demand from China.

Palm oil is affected by price movements in rival oils as they compete for a share of the global vegetable oils market.

In recent sessions, palm has been more driven by macros as opposed to new weather or demand developments, as the market revises its outlook on the U.S. Federal Reserve’s rate cuts, Pranav said.

Markets are currently pricing in a 46.6% chance that the Fed will begin rate cuts in March, dropping from 73.4% a month ago, according to the CME FedWatch Tool.

The Malaysian ringgit MYR=, palm’s currency of trade, strengthened 0.13% against the dollar, with market participants moving cautiously ahead of the two-day Fed meeting that kicks off on Tuesday.

Tags: palm oil, edible oils, futures, prices, Malaysia, soyoil