Palm drops on weaker soyoil, slower demand growth

(The Edge) – Malaysian palm oil futures fell to a two-week low on Tuesday, in line for a second session of declines, tracking weaker soyoil on the US Chicago Board of Trade amid slower-than-expected demand growth.

The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange fell 0.5% to RM2,151 (US$522.98) a tonne at the midday break.

It had earlier fallen to RM2,139, its weakest level since April 2.

“The market today is down as we are still lacking strong demand. It’s not there, buyers are either well bought or are waiting for prices to come further down. Sustained demand is not there,” said a physical trader.

Malaysian palm oil shipments for the first half of April rose 1.5-6.7% from the corresponding period last month, cargo surveyors reported on Monday.

Palm was also down mirroring overnight declines in US soybean oil futures, said another trader. The Chicago May soybean oil contract had fallen 0.5% on Monday, and was down 0.4% on Tuesday.

Palm oil may fall to RM2,110 per tonne, as it has broken a support at RM2,155, according to Reuters market analyst for commodities and energy technicals Wang Tao.

In other related oils, the May soyoil contract on the Dalian Commodity Exchange lost 0.9%, and the Dalian May palm oil contract also declined 0.9%.

Palm oil prices are affected by movements in soyoil, as they compete for a share in the global vegetable oil market.