Malaysian palm oil slides for 3rd-straight day on crude oil slide
KUALA LUMPUR: Malaysian palm oil futures fell for a third day on Tuesday and slide to their weakest in nearly two weeks, as crude deepened its sharp drop and volatility in emerging Asian markets turned investors wary.
Brent crude fell as low as $59.02, its weakest level since May 2009, while U.S. crude was down $1.60 at $54.31 a barrel, extending a 6-month selloff as slowing Chinese factory activity and weakening emerging-market currencies added to concerns about demand.
Traders said while the palm market has been supported over the past weeks on hopes that weakening production will help shrink inventories, this week’s turmoil across equity markets and steep losses in crude could trigger more selling.
“The macro economic factors are taking the lead to slowly push palm prices lower, and they will bring prices further down in the coming days,” said Chandran S.,a trader at LT International Futures.
“The bearish sentiment in worldwide equities and falling crude oil is really going to have a negative impact on commodities. Palm and soybean oil cannot escape,” he added.
The benchmark March contract on the Bursa Malaysia Derivatives Exchange fell to a Dec. 3 low of 2,114 ringgit in afternoon trade, before settling down 2.4 percent at 2,120 ringgit ($608) per tonne by Tuesday’s close.
Total traded volume stood at 52,441 lots of 25 tonnes, above the usual 35,000 lots. The plunge in oil and the failure of an emergency interest rate hike to stabilise Russia’s rouble sent another shock through global financial markets on
Palm, the world’s most traded vegetable oil, also faced pressure from comparative soyoil markets.
The most active May soybean oil contract on the Dalian Commodity Exchange lost 1.43 percent in late Asian trade, while the U.S. soyoil contract for January shed 1.1 percent.Optimism that the ringgit-priced palm feedstock might attract buying interest, however, provided some support.
“The one thing that may neutralize all this is that the weak ringgit and weak palm oil prices may encourage exports,” said a trader with a foreign commodities brokerage in Kuala Lumpur.
Cargo surveyor data show that Malaysian exports of palm oil products picked up to around 615,000-618,000 tonnes in the first half of December, around 2-3 percent higher than the same period in November, as demand from Europe nearly doubled.
Malaysia will also extend its export tax exemption on crude palm oil to January, a circular from the Malaysian customs department showed on Tuesday. The No.2 grower had scrapped the tax from September to encourage overseas sales and cushion the fall in prices that have lost 20 percent this year.
Palm, soy and crude oil prices at 1049 GMT
|MY PALM OIL||JAN5||2112||-39.00||2104||2133||735|
|MY PALM OIL||FEB5||2119||-48.00||2112||2150||11072|
|MY PALM OIL||MAR5||2120||-50.00||2114||2151||22265|
|CHINA PALM OLEIN||MAY5||4952||-64.00||4948||5038||831622|
|CBOT SOY OIL||JAN5||31.91||-6.10||31.82||32.30||6640|
|INDIA PALM OIL||DEC4||415.60||-6.10||415.00||420.90||865|
Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in U.S. cents per pound
Dalian soy oil and RBD palm olein in Chinese yuan per tonne
India soy oil in Indian rupee per 10 kg
Crude in U.S. dollars per barrel
($1 = 3.487 Malaysian ringgit)
($1 = 6.1903 Chinese yuan)
($1 = 63.41 Indian rupee)- Reuters