Palm drops 2% as crude, rival edible oils slide

August 18, 2022: Malaysian palm oil futures fell 2% on Thursday, tracking losses in crude and rival edible oils, although a weak ringgit lent some support to the vegetable oil.

The benchmark palm oil contract FCPOc3 for November delivery on the Bursa Malaysia Derivatives Exchange slid 88 ringgit, or 2.1%, to 4,105 ringgit ($918.55) a tonne during early trade, ending a two-day rise.

FUNDAMENTALS

The ringgit MYR=, palm's currency of trade, fell for a fourth day against the dollar to its lowest since January 2017, making the commodity cheaper for holders of foreign currency.

Three more ships carrying corn and sunflower oil left Ukraine's Black Sea ports on Wednesday, a monitoring group said, bringing the number of vessels to leave Ukraine under a U.N.-brokered grain export deal to 24. 

Dalian's most-active soyoil contract DBYcv1 fell 1.4%, while its palm oil contract DCPcv1 dropped 2.4%. Soyoil prices on the Chicago Board of Trade BOcv1 were down 0.23%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

Oil prices eased as rising output from Russia and worries about a potential global recession weighed on futures, making palm a less attractive option for biodiesel feedstock. 

Palm oil is poised to break a support at 4,085 ringgit and fall towards the next support at 3,857 ringgit per tonne, Reuters technical analyst Wang Tao said. TECH/C

MARKET NEWS

Asian shares tracked lower on Thursday, in step with Wall Street's losses, as even the prospect of a less aggressive Federal Reserve has still set the U.S. central bank on a path for interest rates to stay higher for longer.

Reuters