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Weakness In BMD Palm Deepens Amid Global Equities Rout

8 Feb 2019 4:31 pm
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NEW DELHI (Commoditiescontrol) - Malaysian palm oil futures deepened their early losses in the second session of trade on Friday, tracking weakness in broader markets amid fears of a global growth slowdown spreading to Europe and renewed worries about any near-term resolution of US-China trade tensions.

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.

The April benchmark crude palm oil contract on the Bursa Malaysia Derivatives Exchange (BMD), was down Ringgit 29 at Ringgit 2,290 per tonne by the close after moving in the range of Ringgit 2,312 to Ringgit 2,289 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 was trading lower by 0.62 percent in electronic trade on Friday 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.

China's Dalian Commodity Exchange is closed for the Lunar New Year. Palm oil prices are affected by movements in soyoil rates, as they compete for a share in the global vegetable oil market.

Besides, crude markets fell on Friday, pulled down by worries over a global economic slowdown, although OPEC-led supply cuts and U.S. sanctions against Venezuela provided crude with some support. US West Texas Intermediate (WTI) crude futures stood at USD 52.17 per barrel, down 47 cents, or 0.9 percent, from their last settlement. International Brent crude oil futures were down by 48 cents, or 0.8 percent, at USD 61.15 per barrel.

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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