Malaysian palm oil price falls for 7th day on fresh Sino-US trade tension

  • Business
  • Monday, 06 May 2019

The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange was up 0.4% at 2,067 ringgit ($501.94) per tonne at the close of trade, its fifth consecutive session of gains. It earlier rose 0.7% to 2,073 ringgit, its strongest level since June 7. Palm is also up 4.8% for the week in a second week of gains.

KUALA LUMPUR: Malaysian palm oil futures fell to their lowest in more than five months on Monday as U.S. President Donald Trump's threats to increase tariffs on Chinese imports risked prospects of a trade deal, sending commodities and stock markets lower.

The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange closed down 1.3 percent at 1,984 ringgit ($478.53) a tonne, posting a seventh consecutive session of losses.

It earlier fell as much as 2 percent to 1,970 ringgit, its weakest level since Nov. 28.

Palm oil is expected to stabilise around a support range of 1,940-1,967 ringgit per tonne, said Wang Tao, a Reuters market analyst for commodities and energy technicals.

"A possible fall out in the U.S.-China trade talks after Trump threatened to escalate the year-long trade war and China retaliating by considering delaying the next trade talk is pressuring palm prices further," said a futures trader in Kuala Lumpur.

"The current weakness in commodities and stock markets around the globe may further see extensions of selling activities."

President Trump dramatically increased pressure on China on Sunday to reach a trade deal, saying he would hike U.S. tariffs on $200 billion worth of Chinese goods this week and target hundreds of billions more soon.

Stock markets sank and oil prices tumbled as negotiations were thrown into doubt. 

In other related oils, the Chicago May soybean oil contract fell 1.6 percent on Monday, having lost 1.6 percent the previous week.

Chicago soybean prices fell sharply on Monday to their lowest in over seven months on Trump's trade comments.

Palm oil prices are impacted by movements in soyoil, as the edible oils compete for global market share.

Meanwhile, the May soyoil contract on the Dalian Commodity Exchange rose 0.2 percent, and the Dalian May palm oil contract DCPK9 declined 1.1 percent. - Reuters

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