KUALA LUMPUR: Malaysian palm oil futures edged lower on Monday, as China slashed import tariffs on Canadian canola and Indonesia cancelled plans for its B50 biodiesel mandate, though the upcoming festival demand lent some support.
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange slid 15 ringgit, or 0.37%, to 4,057 ringgit ($1,000.99) a metric ton by the midday break. The contract rose 2.31% on Friday.
The market traded lower due to China reducing its import tariffs on Canadian Canola to a combined rate of 15% from the current 84% and also an adjustment to the reduction in palm oil biofuel demand following Indonesia’s announcement that it will not implement its mandatory B50 grade of palm oil-based diesel this year, said Anilkumar Bagani, head of commodity research at Sunvin Group, a Mumbai-based brokerage.
However, prices are seeing some support as palm oil’s discount against soyoil and sunflower oil continues to attract buyers, Bagani said.
“The upcoming festival season of Chinese New Year and Ramadan and seasonally low production months will also continue to support prices.”
Cargo surveyors are due to release export estimates for January 1-20 on Tuesday.
Dalian’s most-active soyoil contract rose 0.45%, while its palm oil contract added 0.3%. Soyoil on the Chicago Board of Trade was closed for a public holiday.
Palm oil tracks the price movements of rival edible oils as it competes for a share of the global vegetable oils market.
Oil prices were little changed, after rising on Friday, as Iran’s deadly crackdown on protests quelled civil unrest in the country, reducing the chance of a U.S. attack on the major Middle Eastern producer that could disrupt supplies.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
The ringgit, palm’s currency of trade, firmed 0.05% against the dollar, making the commodity slightly expensive for buyers holding foreign currencies.
Palm oil looks neutral in 4,051-4,088 ringgit per metric ton range, and an escape could suggest a direction, Reuters technical analyst Wang Tao said.
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