KUALA LUMPUR: Malaysian palm oil futures fell sharply on Monday, declining by over 3%, as weakness in Dalian palm olein exerted pressure on the market.
The benchmark February contract on the Bursa Malaysia Derivatives Exchange dropped 153 ringgit, or 3.03%, to close at 4,900 ringgit ($1,094.24) per metric ton, reversing gains from the previous session, which saw a 2.5% rise.
Key Drivers of the Decline:
- Dalian Influence: Spread adjustments and weaker prices in Dalian’s palm olein and soyoil markets led the decline. Dalian’s soyoil contract fell 2%, while its palm oil contract slid 1.08%.
- Global Edible Oils Market: Palm oil prices often track rival edible oils like soyoil, which dropped 1.46% on the Chicago Board of Trade.
- Weakened Ringgit: A 0.22% depreciation of the ringgit against the dollar made Malaysian palm oil more affordable for foreign buyers but failed to counteract bearish sentiment.
Other Influences:
Stronger crude oil futures, buoyed by heightened Russia-Ukraine tensions, typically support palm oil as a biodiesel feedstock. However, concerns over fuel demand in China and forecasts of a global oil surplus tempered the impact.
Palm oil remains sensitive to fluctuations in the global edible oils market, as it competes for a share in the vegetable oils sector.
