MUMBAI, 6 Aug (Commoditiescontrol): Malaysian crude palm oil (CPO) futures extended their decline for a second consecutive session on Tuesday, closing at their lowest level in seven months. The downturn was driven by weakness in competing edible oil markets, particularly in Dalian and Chicago.
The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange fell by 80 ringgit, or 2.11%, to close at 3,707 ringgit ($829.31) per metric ton. This marks the lowest closing price since January 8. The contract had already suffered a drop of more than 3% on Monday.
The selloff in Malaysian palm oil futures was triggered by sharp declines in soyoil prices on the Chicago Board of Trade and Euronext rapeseed futures during the overnight sessions. Additionally, Chinese vegetable oil futures saw significant losses during Asian trading hours on Tuesday, contributing to the downward pressure. Specifically, Dalian's most-active soyoil contract dropped by 2.42%, while its palm oil contract fell by 3.31%. Meanwhile, soyoil prices on the Chicago Board of Trade decreased by 2.31%.
Palm oil prices are closely linked to movements in rival edible oils, as these commodities compete for a share of the global vegetable oils market. The ringgit, the currency in which palm oil is traded, weakened by 1.13% against the U.S. dollar, making palm oil more affordable for foreign buyers.
Meanwhile, oil prices experienced volatility on Tuesday due to concerns over a potential escalation in the Middle East conflict and a production drop at Libya's largest Sharara oilfield, raising the possibility of tighter supplies. Brent crude futures edged up by 12 cents, or 0.16%, to $76.42 a barrel at 1001 GMT. Stronger crude oil prices typically make palm oil a more attractive option for biodiesel production.
In Malaysia, palm oil inventories are expected to decline in July for the first time after three consecutive months of increases, according to a Reuters survey. The Malaysian Palm Oil Board is set to release its monthly data on August 12.
(By Commoditiescontrol Bureau; +91 98201 30172)
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