KUALA LUMPUR: Malaysian palm oil futures touched their lowest in more than three years on Wednesday, shedding gains from the previous session, as a plunge in crude oil prices dented sentiment.
Palm oil prices are influenced by movements in crude oil, as the edible oil is used as feedstock to make biodiesel.
The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange was down 1.3 percent at 1,960 ringgit ($467.00) per tonne in the first-half session of trading.
The futures contract hits its lowest since August 2015. In the previous session, palm climbed 0.7 percent after being oversold the week before.
Trading volumes stood at 27,348 lots of 25 tonnes each at the midday break.
The market was still depressed, technically and fundamentally, due to high stocks and slowing exports, a Kuala Lumpur-based trader said.
“But a retracement upwards cannot be ruled out in the current oversold condition,” the trader said.
The overnight plunge in crude oil prices also weighed on sentiment, another trader said.
Inventories in top producers – Indonesia and Malaysia – were expected to rise for the next two months, with demand unlikely to jump from key buyers as palm oil solidifies in winter months.
Malaysia’s palm oil exports fell 10.9 pct in the November 1-20 period according to independent inspection company AmSpec Agri Malaysia on Tuesday, while cargo surveyor Intertek Testing Services reported a drop of 3.2 percent in the same period.
Palm may fall to 1,933 ringgit per tonne, as it has broken a support at 1,972 ringgit, Wang Tao, Reuters market analyst for commodities and energy technicals said.
In other related edible oils, the Chicago December soybean oil contract climbed as much as 0.33 percent.
Source from – Reuters