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JAKARTA: Malaysian palm oil futures fell 2.7% on Friday, tracking a drop in crude and Chicago Board of Trade soyoil prices.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange fell to 2,713 ringgit ($652.48) a tonne in early trade.
“Palm oil prices fell in tandem with weak external markets and lower crude oil prices,” a Kuala Lumpur-based trader told Reuters.
CBOT’s soyoil contract fell 1.1%, as farmer selling offset support from Wednesday’s bullish U.S. quarterly stocks report and strong weekly export sales.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Crude oil, which fell over 1% on Friday over worsening demand prospects due to the COVID-19 pandemic, also weighed down prices.
Cheaper crude oil makes palm oil a less attractive feedstock for biofuels.
Palm oil may revisit its Sept. 30 low of 2,708 ringgit per tonne, as it could have completed a bounce from this level, said Reuters technical analyst Wang Tao.
MARKET NEWS
Oil prices fell nearly 1%, extending losses into a second day as rising production of crude comes amid a worsening COVID-19 pandemic, which threatens to bring more restrictions on movement and consumption that will likely hit demand for fuel.
Asian markets were little changed, as a U.S. stimulus deal remained out of reach and investors waited on fresh U.S. employment data for a read on the economic toll from the coronavirus pandemic.