Palm drops over 2% on US-China trade conflict

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KUALA LUMPUR (July 11): Malaysian palm oil futures fell over 2% to a two-year low on Wednesday evening, tracking weakness in related oils on China's Dalian Commodity Exchange and as an escalating US-China trade conflict weighed on the market.

The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange was down 2.4% at RM2,204 (US$545.95) a tonne at the close of trade, after hitting its lowest since July 14, 2016 at RM2,202. The contract posted its sharpest intraday drop in over four months in its second straight session of declines.

Trading volumes stood at 41,205 lots of 25 tonnes each.

"The market is down mainly on external factors," said a Kuala Lumpur-based trader, referring to related edible oils on the US Chicago Board of Trade and Dalian.

"Especially so on Dalian as the US-China trade war escalates," she said.

The United States said on Wednesday it would slap 10% tariffs on an extra US$200 billion worth of Chinese imports, including numerous consumer items, causing a sell-off in Chinese markets and stocks across Asia.

China said the action was completely unacceptable, and that Beijing would respond to the latest moves by Washington.

Palm oil prices have declined 5.2% so far this month, with traders jittery over concerns about the US-China trade dispute and on weak demand.

In other related oils, the Chicago December soybean oil contract fell 1.7%, while the September soybean oil contract on China's Dalian Commodity Exchange was down 1.1%.

The Dalian September palm oil contract declined 1.7%.

Palm oil prices track the performance of other edible oils as they compete for a share in the global vegetable oils market.

Palm, soy and crude oil prices at 1049 GMT

Contract          Month    Last  Change     Low    High  Volume
MY PALM OIL       JUL8        -54.00       0       0      34
MY PALM OIL       AUG8     2198  -54.00    2193    2238    1480
MY PALM OIL       SEP8     2204  -55.00    2202    2249   16624
CHINA PALM OLEIN  SEP8     4654  -78.00    4642    4724  274970
CHINA SOYOIL      SEP8     5500  -60.00    5490    5546  257506
CBOT SOY OIL      DEC8    28.94   -0.13    28.9    29.3    8783
INDIA PALM OIL    JUL8   625.50   -5.80  625.10   630.8     629
INDIA SOYOIL      JUL8      755   -3.85     754  757.05    2260
NYMEX CRUDE       AUG8    73.68   -0.43   73.17   74.26  147439

Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in US cents per pound
Dalian soy oil and RBD palm olein in Chinese yuan per tonne
India soy oil in Indian rupee per 10 kg
Crude in US dollars per barrel

(US$1 = RM4.0370)
(US$1 = 68.7800 Indian rupees)
(US$1 = 6.6735 Chinese yuan)