KUALA LUMPUR (June 3): Malaysian palm oil futures fell over 1% to a one-week low in the first half of trade on Monday, due to broad-based weakness in global equities and commodities markets.
Stocks and commodities markets worldwide slumped, following U.S. President Donald Trump's move to impose a tariff on all goods coming from Mexico starting at 5%, while investors remain concerned about intensifying Sino-U.S. tensions.
Benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange was last down 1.2% at 2,045 ringgit (US$489.35) per tonne at the midday break, in line for its third straight daily decline.
It earlier fell as much as 1.7% to 2,034 ringgit, its weakest levels since May 28.
Palm oil may fall to 2,030 ringgit, as it failed to break a resistance at 2,111 ringgit per tonne, said Wang Tao, a Reuters market analyst for commodities and energy technicals.
"Weakness in financial and commodities markets across the board in the wake of trade-war jitters is likely to spillover and pressure palm oil futures prices," a Kuala Lumpur-based trader said.
"Renewed strength in the local currency could further dampen market sentiment," he added.
The ringgit, palm's currency of trade, strengthened 0.2% against the dollar to 4.1790 at noon on Monday. A stronger ringgit usually weakens sentiment for palm oil, as it makes the edible oil more expensive for foreign buyers.
Meanwhile oil prices fell more than 1% on Monday, extending losses of over 3% from Friday, when crude markets racked up their biggest monthly losses in six months, amid stalling demand and as trade wars fanned fears of a global economic slowdown.
The Chicago July soybean oil contract fell 0.7% on Friday after four earlier sessions of gains, and was last down 0.4% on Monday.
Corn, wheat and soybean futures dropped on Friday, weighed down by fresh concerns over demand, after U.S. President Donald Trump threatened to place tariffs on imports of goods from Mexico, in response to illegal immigration.
In other related oils, the September soyoil contract on the Dalian Commodity Exchange slipped 1.6% and the Dalian September palm oil contract fell 1.9%.
Palm oil prices are affected by movements in soyoil, with which it competes for global market share.
Palm, soy and crude oil prices at 0454 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JUN9 2016 -14.00 2010 2016 126
MY PALM OIL JUL9 2032 -22.00 2019 2040 1768
MY PALM OIL AUG9 2045 -24.00 2034 2055 7150
CHINA PALM OLEIN SEP9 4392 -84.00 4382 4464 525002
CHINA SOYOIL SEP9 5412 -86.00 5394 5478 402582
CBOT SOY OIL JUL9 27.49 -0.10 27.43 27.59 4488
INDIA PALM OIL JUN9 514.00 -5.30 513.50 517.2 490
INDIA SOYOIL JUN9 752.5 -2.80 751.35 753.8 940
NYMEX CRUDE JUL9 52.91 -0.59 52.11 53.43 103734
Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in U.S. 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 U.S. dollars per barrel
(US$1 = 4.1790 ringgit)
(US$1 = 69.4350 Indian rupees)
(US$1 = 6.9014 Chinese yuan)