Palm oil loses ground for fourth session, hits six-week low

Malaysian palm oil futures dropped on Wednesday for a fourth straight session, slipping to their lowest in six weeks, as competitive pricing of rival edible oils weighed on demand.

The benchmark palm oil contract FCPOc3 for July delivery on the Bursa Malaysia Derivatives Exchange slid 78 ringgit, or 1.91%, to 3,996 ringgit ($834.24) a metric ton by the midday break, hitting its lowest since March 6.

“The latest USDA World Agricultural Supply and Demand Estimates (WASDE) report presented bearish figures, prompting funds to unwind positions and build short interests across the grains and oilseed sectors,” said Marcello Cultrera, director at Singapore-based commodities consultancy Apricus 8 Pte Ltd.

This has impacted trading strategies and triggered a downward reversal on the Dalian and Malaysian bourses, he said.

Dalian’s most-active soyoil contract DBYcv1 fell 1.68%, while its palm oil contract DCPcv1 eased 2.22%. Soyoil prices on the Chicago Board of Trade BOcv1 were down 0.38%.

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

“Such movement is likely to boost demand in the short term, given the current tightness in destination markets,” he added.

Some traders said buying from key destinations had been muted, partly due to more attractive pricing of competing edible oils.

Crude oil prices eased in early trade as worries about global demand due to weak economic momentum in China and fading hopes for U.S. interest rate cuts in the near term outweighed supply fears on heightened tensions in the Middle East. O/R

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

Tags: Malaysia, soyoil, palm oil, edible oils, futures, benchmark contract