Malaysian palm oil futures snapped a three-day winning streak on Wednesday due to lower crude oil prices, while the resumption of buying by India and Malaysia’s renewed commitment to its biodiesel programme capped losses.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange slid 22 ringgit, or 1.01%, to 2,160 ringgit ($496.32) by 0320 GMT.
Palm oil climbed 1.87% to its highest since April 20 in the previous session.
Indian buyers have resumed purchases of Malaysian palm oil after a four-month gap following a diplomatic row, with buying spurred by a fall in domestic inventories and discounted prices.
Malaysia will restart its nationwide roll-out of the B20 biodiesel programme in September after postponing it due to a two-month partial lockdown to contain the coronavirus, alleviating concerns that the mandate would be abolished amid low crude prices.
Oil prices dipped as concerns over the lasting economic fallout from the pandemic outweighed signs of improving demand and production cuts by major oil producers.
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
Dalian’s most-active soyoil contract gained 0.04%, while its palm oil contract was up 0.31%. Soyoil prices on the Chicago Board of Trade were trading 0.18% lower.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Palm oil may end its current gains around a resistance at 2,223 ringgit per tonne, as suggested by a gap and a projection analysis, Reuters technical analyst Wang Tao said.