Palm oil extends losses on weak demand from top buyers

[KUALA LUMPUR] Malaysian palm oil futures fell for a second straight session on Wednesday, weighed down by losses in rival vegetable oils and slowing demand from top buyers India and China.

The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange was down 17 ringgit, or 0.64 per cent, at 2,622 ringgit (US$630.59) during the midday break.

Dalian's most-active soya bean oil contract lost 0.5 per cent, while its palm oil contract fell 1.66 per cent. Soya bean oil prices on the Chicago Board of Trade were fell 0.3 per cent.

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

Additionally, concerns over weak demand due to the coronavirus outbreak is still lingering, a Kuala Lumpur-based trader said.

Palm oil prices have been hit by slowing demand this month, as businesses in China remained shut due to the coronavirus epidemic and India, the world's largest consumer of edible oils, imported less of the commodity following restrictions on refined palm oil.

Malaysia's palm oil exports between Feb 1 and 15 dropped 6.7 per cent-10 per cent from a month before, according to cargo surveyors. This is a slight recovery compared with the 20 per cent-29.4 per cent drop over the Feb 1-10 period.

The death toll from the fast-spreading virus in mainland China passed 2,000 on Wednesday, although the number of new cases fell for a second straight day as authorities tightened containment measures in the worst-hit city of Wuhan.

Meanwhile, the palm oil industry is bracing for additional food safety concerns after European food companies asked top palm producers in Indonesia and Malaysia to cut the amount of mineral oil hydrocarbons found in palm oil.

The industry is already trying to adjust refining processes to cut the amount of 3-monochloropropane diol (3-MCPD), a contaminant suspected to be carcinogenic, in anticipation of an upcoming regulation by the European Union on the contaminant.

Palm oil may bounce to 2,711 ringgit per tonne, as it has stabilised around a support at 2,615 ringgit, Reuters technical analyst Wang Tao said.

REUTERS