Palm opens over 2pct lower on weaker crude and Chicago soyoil, set for weekly loss

KUALA LUMPUR: Malaysian palm oil futures opened more than two per cent lower on Friday and were on track for a weekly loss, as softer Chicago soyoil and crude oil prices pressured the market.

The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange slid RM98, or 2.05 per cent, to RM4,674 (US$1,147.56) a metric ton in early trade. The contract has fallen 3.1 per cent so far this week after rising 1.74 per cent in the previous week.

Oil prices fell slightly as markets weighed the possibility of a truce between the US and Iran against the bombing of Saudi Arabia by Houthi rebels after a week of price spikes.

Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.

Soyoil prices on the Chicago Board of Trade fell 0.83 per cent, while the Dalian Commodity Exchange was closed for a public holiday.

Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market.

The ringgit, palm's currency of trade, strengthened 0.22 per cent against the dollar, making the commodity slightly more expensive for buyers holding foreign currencies.

Palm oil prices are poised to remain under pressure as rising inventories in Malaysia and sluggish buying by India, the world's biggest importer, weigh on the market and the impact of El Niño has yet to be felt, industry officials said.

Palm oil may retest support at RM4,732 per ton, a break below which may trigger a fall into the RM4,677 to RM4,711 range, Reuters technical analyst Wang Tao said.

Asian shares held their nerve on Friday as a relentless bond selloff pushed longer dated US yields to two-decade highs, raising borrowing costs worldwide and threatening lofty equity valuations.