Vegoil: Palm Falls Nearly 2 PCT, Tracking Weakness in Related Oils
Category: Oilseeds
(Reuters) – Malaysian palm oil futures fell sharply in early trade on Thursday, tracking weakness in rival edible oilseeds and set for a second straight day of losses.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange fell 1.8 percent to 2,698 ringgit ($637.83) a tonne at the midday break, its sharpest decline since Sept. 18.
Traded volumes stood at 26,797 lots of 25 tonnes each at noon.
“The heavy drop in China palm olein and weakness in rival oilseed soy dampened market sentiment,” said a Kuala Lumpur based futures trader, referring to palm olein on China’s Dalian Commodity Exchange and soyoil on the U.S. Chicago Board of Trade.
China soybean oil futures fell over 2 percent on Thursday, reaching their lowest level in three months, following a drop in global prices and amid ongoing pressure from large stocks.
A palm oil trader in Kuala Lumpur said Dalian’s palm olein decline could be due to profit-taking ahead of a week-long long holiday. China’s announcement on Monday that it would start auctioning soybeans its from state reserves could also weigh on trading sentiment, said traders.
Palm oil prices are affected by the performance of related edible oils such as soy, as they compete for a share of the global vegetable oils market.
Buyers would usually switch to soyoil if its spread with palm oil narrows, as it is perceived to be of better quality.
The December soybean oil contract on the Chicago Board of Trade was down 0.4 percent, while the January soybean oil contract on the Dalian Commodity Exchange fell 1.5 percent.
