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    Palm oil down on prospects of higher output, lower exports

    Synopsis

    "Palm oil prices are following weakness in soybean oil on the Chicago Board of Trade" said Anilkumar Bagani.

    palm-oil-gettyGetty Images
    The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange fell 0.5 per cent, to 2,610 ringgit during the midday break.
    KUALA LUMPUR: Malaysian palm oil futures fell on Monday, pressured by prospects of higher production and concerns over falling demand due to the global spread of the coronavirus, although losses were limited by a weaker ringgit.

    The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange fell 0.5 per cent, to 2,610 ringgit during the midday break.

    "Palm oil prices are following weakness in soybean oil on the Chicago Board of Trade and RBD palm olein futures on the Dalian Commodity Exchange," said Anilkumar Bagani, research head of Sunvin Group, a Mumbai-based vegetable oil broker.

    "The sharply lower crude oil prices amid increasing new coronavirus cases outside of China also impacted the sentiment."

    The contract lost 1.4 per cent last week, with prices touching their lowest level since November 2019, due to demand concerns as the virus forced millions in China, the second-largest buyer of palm oil, to stay at home amid attempts to contain the spread of the disease.

    Fears grew on Monday that the outbreak in China will grow into a pandemic with disruptive and deadly consequences for countries around the world, after sharp rises in infections in South Korea, Italy and Iran.

    The Malaysian Southern Peninsular Palm Oil Millers Association had forecast Feb. 1-20 production to increase by 33.6 per cent, traders said.

    Dalian's most-active soyoil contract fell 1.3 per cent, while its palm oil contract dropped 0.5 per cent. Soyoil prices on the Chicago Board of Trade were also declined 1.3 per cent.

    The ringgit, palm's currency of trade fell 0.7 per cent to its weakest since Sept. 4, 2019, following talks of a new government that surfaced on Sunday. A weaker ringgit makes palm cheaper for holders of foreign currency.

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



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