KUALA LUMPUR: Malaysian palm oil futures slipped to their lowest in more than a week on Thursday, reversing gains in the morning session after crude prices dropped to a 27-month low.
Weaker oil prices makes palm a less attractive option to be used as biodiesel feedstock, eating into demand. Soyoil prices tracked by palm also took a hit. The US soyoil contract for December lost more than 1.0 per cent in late Asian trade.
The benchmark December contract on the Bursa Malaysia Derivatives Exchange fell as much as to 2,137 ringgit, the lowest since Sept. 24. It later settled at 2,150 ringgit ($662) per tonne, down 2.2pc from the previous day. Total traded volume stood at 45,828 lots of 25 tonnes each, above the average 35,000 lots.
Interest for the tropical oil was also curbed by the stronger Malaysian ringgit, which led gains among Asian currencies after a disappointing reading on US factory output blunted the dollar’s strength.
The currency gained 0.57pc late Thursday to 3.255 against the greenback, making the ringgit-priced palm feedstock more expensive for international buyers.
Industry players are watching for the pace of output and inventory levels in the top growers, Indonesia and Malaysia.
A commodities analyst earlier told an industry conference that competition between Indonesia and Malaysia to export more palm oil could help reduce stockpiles from November onwards.
Published in Dawn, October 3rd, 2014