VEGOILS-Palm drops to over five-week low on weaker rival oils, stronger ringgit
20/03/2023 (Nasdaq), Jakarta - Malaysian palm oil futures dropped for a third straight session on Monday to their lowest in more than five weeks, tracking weakness in rival vegetable oils and a stronger ringgit.
The benchmark palm oil contract FCPOc3 for June delivery on the Bursa Malaysia Derivatives Exchange lost 60 ringgit, or 1.53%, to 3,860 ringgit ($861.41) a tonne by midday.
"Bursa Malaysia Derivatives palm (was?) pressured by sharply lower European rapeseed which are now at a rare discount, first time in last 25 years against CPO at Rotterdam market," said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
"The easing of Black Sea sunflower oil prices, which have dropped nearly 15% for this month has added further bearishness," he said.
Rapeseed futures hit a two-year low on Friday as weakness in related vegetable oil and crude oil markets added to pressure from ample rapeseed supply in Europe.
The contract fell for two consecutive weeks last Friday, losing 4.23% for the week amid fears that the closure of several U.S banks and trouble at Swiss lender Credit Suisse would blow up into a global banking crisis.
Malaysian ringgit, the contract currency of trade, rose 0.29% against the dollar in early trade, also pressuring prices as it made palm more expensive for foreign currency holders.
"Appreciation in the local currency could dampen market sentiment further. Market players likely to trade cautious awaiting palm oil export data for period of March 1-20 days," a Kuala Lumpur-based trader said.
Dalian's most active soyoil contract DBYcv1 slid 0.05%, while its palm oil contract DCPcv1 dropped 1.10%. Soyoil prices on the Chicago Board of Trade BOc2 were down 1.27%.
Palm oil FCPOc3 may break a support of 3,892 ringgit per tonne, and fall into a range of 3,810-3,856 ringgit, Reuters technical analyst Wang Tao said. TECH/C
($1 = 4.4810 ringgit)
Reuters