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Palm oil Slumps to below 3,900 Riggint After soy and crude weakness, set for 9.7% weekly drop

KUALA LUMPUR: Malaysian palm oil futures fell to a one-month low on Thursday, on course for a 9.7% weekly drop, as weakness in rival soy oil and crude futures weighed on the market.

The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange slid 153 ringgit, or 3.8%, to 3,869 ringgit ($850.89) a tonne by the midday break.

Palm fell for a fourth consecutive session and was set for its sharpest weekly decline in four months.

Traders adjusted positions ahead of a long weekend, as Bursa Malaysia will be closed on Friday for a public holiday, a day before the country holds a general election.

“The strength in ringgit is putting a squeeze on refining margins,” said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.

However, the downside to prices could be limited if the tropical storms in Malaysia worsen and hurt the quantity and quality of crude palm oil, he added.

The ringgit, palm’s currency of trade, has risen from its recent lows, making the edible cheaper for holders of foreign currencies.

Palm oil falls for third day on higher stocks, demand woes

Oil prices fell for a second straight day as concerns over geopolitical tensions eased, making palm a less attractive option for biodiesel feedstock.

Rising coronavirus infections in China, which is still following a strict zero-COVID policy, added to concerns over demand for edible oils and crude. Dalian’s most-active soyoil contract fell 0.8%, while its palm oil contract eased 3.8%.

Soyoil prices on the Chicago Board of Trade were down 0.9%, extending an overnight plunge as the contract retreated from a five-month high set last week.

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