Palm oil dives 2.7% amid plunging rival edible oils, stronger ringgit
31/01/2024 (Hellenic Shipping News) - Malaysian palm oil futures plummeted on Tuesday, extending losses on prolonged weakness in rival edible oils and a stronger ringgit.
The benchmark palm oil contract FCPOc3 for April delivery on the Bursa Malaysia Derivatives Exchange fell 106 ringgit, or 2.68%, to 3,842 ringgit ($813.12) a metric ton at closing.
The contract suffered its greatest daily decline since Oct. 6. It fell as much as 2.94% during the session.
“Palm is following the weakness in soft oils,” said Pranav Bajoria, director of Singapore-based brokerage Comglobal Pte Ltd.
Both Dalian’s most-active soyoil contract DBYcv1 and palm oil contract DCPcv1 plunged 3.8%, with the former logging its biggest daily decline in more than a year, amid weakening demand from top soy importer China and higher Argentina production.
Soyoil prices on the Chicago Board of Trade BOcv1 fell 0.64%. Speculators have built their most bearish-ever January view across U.S. grains and oilseeds, and funds were net sellers of soybeans, corn and wheat futures on Monday, traders said.
Palm oil is affected by price movements in rival oils as they compete for a share of the global vegetable oils market.
In recent sessions, palm has been driven more by macros as opposed to weather or demand developments, as the market revises its outlook on the Federal Reserve’s rate cuts, Pranav said.
Markets are currently pricing in a 46.6% chance the Fedwill begin rate cuts in March, dropping from 73.4% a month ago, according to the CME FedWatch Tool.
The Malaysian ringgit MYR=, palm’s currency of trade, strengthened 0.15% against the dollar, with market participants cautious as the two-day Fed meeting kicks off Tuesday.
A stronger ringgit makes palm oil less attractive for foreign currency holders.
LSEG Agriculture Research believes palm oil futures will trend down this week, on dampened Chinese and Indian demand, and potentially higher Malaysian palm output following a government move that would allow plantations to hire foreign workers.
Source: Reuters