KUALA LUMPUR:On Friday, Malaysian palm oil futures recovered some of their earl losses, but they were set for their biggest weekly drop in more than four months as markets watched edible oils that were competing with them fall.
After six sessions of losses, the benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange gained 7 ringgit, or 0.2 percent, to 3,576 ringgit ($808.32) per tonne at midday.
The contract dropped to its lowest level since Oct. 4.
The contract is on track for its biggest weekly drop since the week that ended on November 18 with a decline of 8.8% so far this week.
According to Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari, the sell-off in soybean, sunflower, and rapeseed oils is putting pressure on palm oil prices. However, estimates of lower production and end-stocks provided some support to the market.
According to Paramalingam,”Palm oil prices have decoupled from fundamentals due to the overall global selling.”
“We need better overall demand to make that possible, and it is extremely difficult to pinpoint when exactly the price recovery will occur,” the statement reads.
The most active soyoil contract in Dalian decreased by 1.5%, while the palm oil contract decreased by 1.1%. On the Chicago Board of Trade, soyoil prices were up 0.6 percent. As they compete for a share of the global market for vegetable oils, palm oil is affected by changes in the prices of related oils.
A circular posted on the Malaysian Palm Oil Board website on Thursday revealed that Malaysia raised its reference price and maintained its 8 percent crude palm oil export tax for April.
After US Energy Secretary Jennifer Granholm said that refilling the country’s Strategic Petroleum Reserve may take several years, oil prices fell due to concerns about an oversupply. As a feedstock for biodiesel, palm oil is less appealing due to lower oil prices.
While analyst Wang Tao, a projection analysis suggests that the price of palm oil per tonne could fall to 3,420 ringgit.