Malaysian palm oil futures slipped on Wednesday to hover near a nine-month low hit in the previous session, dragged by a forecast showing higher April inventory, and weaker soybean oil amid rising Sino-U.S. tensions over the coronavirus outbreak.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange fell 4 ringgit, or 0.2%, to 1,971 ringgit ($457.73) per tonne by 0323 GMT.
Palm oil closed at its lowest level since July on Tuesday, pressured by expectations of April stockpile rising 10% from March to a four-month high.
Oil prices fell after sharp gains overnight, as investors focused on oversupply risks after U.S. crude inventories rose more than expected amid a slump in demand caused by restrictions to halt the coronavirus spread.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
Global demand for palm oil, the world’s most widely-used vegetable oil, may have bottomed out after being hammered by the coronavirus pandemic and is now set for a slow recovery, the Malaysian Palm Oil Council told Reuters on Tuesday.
Malaysia’s central bank cut its key interest rate by 50 basis points to 2.00% on Tuesday, its lowest since 2009, to help the Southeast Asian economy weather the impact of the pandemic and a collapse in prices for its energy exports.
The ringgit, palm’s currency of trade, fell 0.12% against the dollar, making the commodity cheaper for holders of foreign currency.
Dalian’s most-active soyoil contract fell 1.15%, while its palm oil contract declined 1.81%. Soyoil prices on the Chicago Board of Trade were down 0.91%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Palm oil still targets a zone of 1,921-1,954 ringgit per tonne, as suggested by its wave pattern and a projection analysis.