Palm slips to more than six months closing low on weaker rival oils
24/03/2023 (Hellenic Shipping News) - Malaysian palm oil futures slumped to a more than six-month closing low on Thursday tracking losses in rival edible oils, while caution as investors gauged the U.S. Federal Reserve’s comments also weighed on sentiment.
The benchmark palm oil contract FCPOc3 for June delivery on the Bursa Malaysia Derivatives Exchange slid 93 ringgit, or 2.54%, to 3,571 ringgit ($808.65) a tonne, hitting its lowest closing since Oct. 4.
The market mirrored a sharp overnight drop in soybean oil, but buying interest appeared after the contract touched the day’s low of 3,597 ringgit, a Kuala Lumpur-based trader said.
Dalian’s most-active soyoil contract DBYcv1 fell 1.9%, while its palm oil contract DCPcv1 eased 3.2%. Soyoil prices on the Chicago Board of Trade BOcv1 were down 0.9%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Oil prices dipped, having hit their lowest since late 2021 earlier this week, after Federal Reserve Chair Jerome Powell highlighted banking sector credit risks for the world’s largest economy.
Lower crude oil prices make palm a less attractive option for biodiesel feedstock.
Crude palm oil spot prices are likely to weaken to below $700 per tonne by year-end on increasing output, Fitch Ratings said in a note.
Latest production data from Malaysia and Indonesia indicate that yields are on an uptrend, it said.
“A hit to sunflower seed oil supply due to the Russia-Ukraine war is a key upside risk to our expectations,” it added.
Source: Reuters