KUALA LUMPUR: Malaysian palm oil futures suffered the sharpest drop in three weeks on Thursday evening after a third straight session of losses, tracking weaker edible oils such as soyoil on the Chicago Board of Trade (CBOT). Declines in soyoil and palm olein on China’s Dalian Commodity Exchange also weighed on palm prices.
The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange fell 0.9 percent to 2,557 ringgit ($596) at the close of trade, its sharpest daily drop since June 21. It hit an intraday low of 2,553 ringgit, its lowest level in a week. Traded volumes stood at 35,950 lots of 25 tonnes each on Thursday evening. “The market is seeing some downside correction on weakness in soybean oil and China’s palm olein,” said a futures trader from Kuala Lumpur.
Palm takes cues from movements in related edible oils, as they compete for a share in the global vegetable oils market. It had climbed to its highest in seven weeks during Tuesday’s trade before it fell tracking CBOT and Dalian soyoil, and is up 0.1 percent for the week so far. The December soybean oil contract on the Chicago Board of Trade declined 1.1 percent on Thursday, in line with the drop in soybean prices which fell on the back of profit taking after dry weather in the U.S. caused a rally.
In other related oils, the September soybean oil on the Dalian Commodity Exchange was down 0.8 percent, while the September palm olein dropped 0.7 percent. The palm oil September contract may slide more to 2,551 ringgit per tonne, according to Reuters market analyst for commodities and energy technicals Wang Tao.