Palm oil falls to 7-month low on weaker rival Dalian, Chicago contracts
06/08/2024 (Reuters), Kuala Lumpur - Malaysian palm oil futures extended losses for a second session on Tuesday to close at their lowest in seven months, as weakness in rival Dalian and Chicago contracts weighed.
The benchmark palm oil contract FCPOc3 for October delivery on the Bursa Malaysia Derivatives Exchange closed 80 ringgit, or 2.11% lower at 3,707 ringgit ($829.31) a metric ton, its lowest close since Jan. 8.
The contract fell more than 3% on Monday.
Malaysian palm oil futures opened gap lower following a sharp selloff in soyoil on the Chicago Board of Trade and in Euronext rapeseed futures overnight, as well as in Chinese vegetable oil futures in Asian hours on Tuesday, said Anilkumar Bagani, commodity research head at Mumbai-based Sunvin Group.
"However, the slightly stronger Malaysian ringgit and the upward recovery in energy markets and the Asian equity markets injected some confidence in palm oil," Bagani said.
"The futures were seen recovering from the early selloff but still in negative territory."
Dalian's most-active soyoil contract DBYcv1 was down 2.42%, while its palm oil contract DCPcv1 lost 3.31%. Soyoil prices on the Chicago Board of Trade BOcv1 were down 2.31%.
Palm oil tracks price movements of rival edible oils, as they compete for a share of the global vegetable oils market.
The ringgit MYR=, palm's currency of trade, weakened 1.13% against the dollar, making the commodity less expensive for buyers holding foreign currencies.
Oil prices pared gains in volatile trade on Tuesday as fears of an escalation in the Middle East conflict and a drop in production at Libya's largest Sharara oilfield raised the prospect of tight supplies. O/R
Brent crude futures LCOc1 were up 12 cents, or 0.16%, to $76.42 a barrel at 1001 GMT. Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
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.
Industry regulator the Malaysian Palm Oil Board is scheduled to release its monthly palm oil data on Aug. 12.
($1 = 4.4700 ringgit)