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BMD Palm Edges Lower On Broad Selling, Falling Equities

8 Feb 2019 11:26 am
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NEW DELHI (Commoditiescontrol) - Malaysian palm oil futures moved lower in the first session of trade on Friday, tracking weakness in broader markets as investors worried about a deepening global economic slowdown, with sentiment not helped by the absence of any positive signs for a resolution in the US-China trade row.

Continued appreciation in Ringgit against USD also weighed on prices. A stronger Ringgit, palm's currency of trade, usually makes the edible oil dearer for holders of foreign currencies.

However, widening CPO discount to soybean oil at high of USD 116, declining trend in Malaysia & Indonesian stocks and production, squeezing out global supplies and improving export demand, limited losses.

The April benchmark crude palm oil contract on the Bursa Malaysia Derivatives Exchange (BMD), was down Ringgit 14 at Ringgit 2,304 per tonne at the midday break after moving in the range of Ringgit 2,311 to Ringgit 2,292 per tonne.

The European Commission on Thursday sharply cut its forecasts for euro zone economic growth this year and next, stoking fears a global slowdown is spreading to Europe as businesses and investors grapple with trade frictions. Adding to the gloomy mood, US President Donald Trump said he did not plan to meet with Chinese President Xi Jinping before a March 1 deadline to achieve a trade deal.

In other related oils, the CBOT March soybean oil contract settled 9 points lower on Thursday on renewed concerns over US-China trade. Earlier on Thursday, White House adviser Larry Kudlow said in an interview on Fox Business Network that there was a sizable distance to go in US-China trade talks. Palm oil prices are affected by movements in soyoil rates, as they compete for a share in the global vegetable oil market.

Besides, crude oil markets fell on Friday, pulled down by an economic slowdown, although supply cuts led by producer club OPEC and US sanctions against Venezuela provided crude with some support. US West Texas Intermediate (WTI) crude futures stood at USD 52.20 per barrel, down 44 cents, or 0.8 percent, from their last settlement. WTI dropped by around 2.5 percent the previous session. International Brent crude oil futures were down by 44 cents, or 0.7 percent, at USD 61.19 per barrel, after falling 1.7 percent the previous session.

Palm oil prices are also impacted by movements in crude oil, as the vegetable oil is used as feedstock to make biodiesel.

Meanwhile, market participants are now waiting for a long list of US Department of Agriculture crop forecasts and estimates due on Friday after key reports were delayed due to the 35-day partial government shutdown.

(By Commoditiescontrol Bureau)


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