KUALA LUMPUR: Malaysian palm oil futures closed more than 1% lower on Wednesday, for a second straight session, as weaker rival edible oils and crude oil prices as well as concerns over April export demand weighed on sentiment.
The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange slid 49 ringgit, or 1.07%, to 4,532 ringgit ($1,158.19) a metric ton at the close.
Crude palm oil futures are weighed down by selling pressure in crude oil, Chicago soyoil, and the Dalian markets, while growing concerns over April demand add to the pressure, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
“Freight costs have risen exponentially higher, and this has led to demand tapering and a build-up of processed oil stocks in storage tanks,” he said.
READ MORE: Malaysian palm oil drifts lower
Dalian’s most-active soyoil contract fell 0.93%, while its palm oil contract shed 2.14%. Soyoil prices on the Chicago Board of Trade were down 0.79%. Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market.
Oil prices fell after Iraq resumed crude exports via pipeline to Turkey’s Mediterranean port of Ceyhan, providing hopes for some relief amid disrupted supply from Gulf producers.
Weaker crude oil futures make palm oil a less attractive biodiesel feedstock.
The ringgit, palm’s currency of trade, strengthened 0.18% against the dollar, making the commodity more expensive for buyers holding foreign currencies.
Global edible oil markets are behaving unpredictably as energy supply disruptions from the Middle East war lift hopes for biodiesel demand, though subdued buying from major importers has clouded the price outlook, industry veteran Dorab Mistry said.
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