Palm oil opens lower on weak Dalian rivals, crude oil
Malaysian palm oil futures fell on Monday, pressured by weaker Dalian oils and crude prices, though gains in Chicago soyoil limited losses. The October contract dropped 1.84% to RM4,167/ton. A stronger ringgit and weak biodiesel demand also weighed on sentiment. Market remains range-bound pending clear direction.
KUALA LUMPUR: Malaysian palm oil futures opened lower on Monday, weighed down by weaker rival Dalian oils and crude oil prices, though stronger Chicago soyoil capped the fall.
The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange slid RM78, or 1.84 per cent, to RM4,167 a metric ton in early trade. The contract rose 0.35 per cent on Friday.
Dalian’s most-active soyoil contract eased 0.05 per cent, while its palm oil contract shed 1.46 per cent. Soyoil prices on the Chicago Board of Trade (CBOT) rose 0.15 per cent.
Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market.
Oil prices extended declines after OPEC+ agreed to another large production hike in September, with concerns about a slowing economy in the US, the world’s biggest oil user, adding to the pressure.
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
The ringgit, the palm’s currency of trade, strengthened 0.98 per cent against the dollar, making it more expensive for buyers holding foreign currencies.
Meanwhile, old trees and ageing farmers worsened the outlook for top palm oil exporters.
Palm oil looks neutral in RM4,211-RM4,273 per metric ton range and an escape could suggest a direction, Reuters technical analyst Wang Tao said.
Asian share markets followed Wall Street lower on Monday as fears for the US economy returned with a vengeance, spurring investors to price in an almost certain rate cut for September and undermining the dollar.
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Source : The Business Times
