Palm oil prices drop 1.8% on cheaper rival oils, firmer ringgit

SINGAPORE: Malaysian palm oil futures fell for a fourth consecutive session on Monday, as cheaper rival oils and a stronger ringgit made the edible oil less attractive to foreign buyers.

The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange slid further by 1.8% to 2,325 ringgit ($ 542.72) a tonne by midday.

“It’s tracking a weak external market,” a Kuala Lumpur-based trader told Reuters, adding that fears of a second wave of the COVID-19 pandemic has curbed demand across all edible oil markets.

Dalian’s most-active soyoil contract fell 2.5% and its palm oil contract fell 3.5%. Soyoil prices on the Chicago Board of Trade last dropped 0.5%.

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

Also weighing on the market, the ringgit firmed 0.1%, making Malaysian palm oil less attractive for holders of foreign currencies.

Palm oil may test a support at 2,339 ringgit per tonne, a break below which could cause a fall to 2,283 ringgit, Reuters analyst Wang Tao said.

Indonesia’s state oil company PT Pertamina announced on Monday that it will start producing 3,000 barrels per day of “green” diesel made from 100% palm oil starting in June next year.

But the production was too small and timeline too far ahead to affect prices, the Kuala Lumpur-based trader said.