Palm oil declines as weaker crude oil, firmer ringgit weighs
Malaysian palm oil futures fell 1.15% to 3,872 ringgit ($882.00) per metric ton, pressured by weaker crude oil prices and a stronger ringgit. Crude oil prices hovered near eight-month lows amid recession fears in the U.S., diminishing palm oil’s appeal for biofuels. Additionally, the ringgit’s 2.2% gain against the dollar made palm oil more expensive for foreign buyers. A Reuters survey predicts a drop in palm oil inventories and increased exports.
KUALA LUMPUR: Malaysian palm oil futures fell on Monday, as weaker crude oil prices and a stronger ringgit weighed on market sentiment.
The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange slid 45 ringgit, or 1.15%, to 3,872 ringgit ($882.00) a metric ton by the midday break.
The contract fell 0.63% last week, a second consecutive weekly drop.
The broader decline in global equity markets has generated negative sentiment and exerted pressure on commodity prices, said a Mumbai-based trader.
“Additionally, the drop in crude oil prices, driven by recession fears in the U.S., has raised concerns about palm oil demand for biofuels,” the trader added.
Oil prices hovered at eight-month lows on Monday as fears of a recession in the United States, the world’s top oil consumer, offset concerns that escalating tensions in the Middle East may affect supplies from the largest producing region.
Brent crude futures were down 0.48%, to $76.44 a barrel by 0533 GMT. Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
The ringgit, palm’s currency of trade, strengthened 2.2% against the dollar, making the commodity more expensive for buyers holding foreign currencies.
Dalian’s most-active soyoil contract fell 0.34%, while its palm oil contract ticked up 0.03%. Soyoil prices on the Chicago Board of Trade were down 0.07%.
Palm oil tracks the price movements of rival edible oils, as they compete for a share of the global vegetable oils market.
Palm oil inventories in Malaysia are expected to drop in July for the first time after rising for three consecutive months, a Reuters survey showed on Monday.
Palm oil stocks in the world’s second-biggest producer were seen at 1.80 million metric tons, down 1.17% from June-end.
Exports of palm oil products were estimated to have increased by 26.1% month-on-month to 1.52 million tons, while crude palm oil production was seen at 1.82 million tons in July, a 12.7% increase from a month ago.
Industry regulator the Malaysian Palm Oil Board is scheduled to release its monthly palm oil data on August 12.
Palm oil is expected to bounce to 3,953 ringgit per metric ton, as it has broken resistance at 3,913 ringgit, Reuters technical analyst Wang Tao said.
Source Link : https://www.brecorder.com/news/40315973/palm-oil-declines-as-weaker-crude-oil-firmer-ringgit-weighs
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