PETALING JAYA: Malaysian palm oil futures are on track for their biggest drop in more than 16 months after they fell nearly 10% in morning trading today.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange fell RM363, or 9.9%, to RM3,300 a tonne by the midday break, extending losses into a sixth session and hitting its lowest since Feb 4.
Last week, palm oil posted its first weekly drop in three weeks, falling 11.3% on worries over tepid June exports and forecasts of higher stocks and output.
“Crude palm oil futures on the Bursa Malaysia Derivatives Exchange are trading sharply lower following bearish momentum in CBOT (Chicago Board of Trade) soy oil futures,” Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group, told Reuters.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
CBOT soy oil declined amid worries over a possible US move to reduce biodiesel production and were down 3.4% to their lowest in nearly four months.
US President Joe Biden’s administration, under pressure from labour unions and senators including from his home state of Delaware, is considering ways to provide relief to US oil refiners from biofuel blending mandates, three sources familiar with the matter told Reuters.
Palm oil may test a support at RM3,602 to RM3,635 per tonne, a break below which could open the way towards the range of RM3,447 to RM3,506, Reuters technicals analyst Wang Tao said.