Adds midday prices, analyst comments
JAKARTA/SINGAPORE, Oct 27 (Reuters) – Malaysian palm oil futures traded lower on Wednesday, snapping two consecutive sessions of gains, as a new wave of infections in China dampened demand prospects and the commodity tracked cheaper rivals elsewhere.
The benchmark palm oil contract FCPOc3 for January delivery on the Bursa Malaysia Derivatives Exchange fell 0.5% to 4,989 ringgit ($1,202.75) per tonne after gaining 1.8% in the previous two sessions.
Palm prices were weighed by losses by rival oils on the Dalian Commodity Exchange and the Chicago Board of Trade (CBOT) as well as crude oil, Anilkumar Bagani, head of research at the Mumbai-based vegetable broker Sunvin Group said.
“Fears of another round of COVID outbreaks in China…. were (among) the main macros behind the profit taking trigger in palm oil.”
Dalian’s most-active soyoil contract DBYcv1 fell 0.1%, while soybean oil prices on the CBOT BOc2 declined 0.1%.
Crude oil prices LCOc1 fell 0.6% after industry data showed crude oil stockpiles rose more than expected and that fuel inventories unexpectedly increased last week in the United States.
Palm oil is affected by price movements in related oils, as they compete for a share in the global vegetable oils market. Cheaper crude oil makes palm a less attractive feedstock for biofuel.
China is facing a new wave of infections involving nearly 200 locally transmitted symptomatic cases in 12 provincial areas since Oct. 17, potentially impacting demand for the edible oil.
Capping the gains, however, were lingering concerns about palm oil supply in Malaysia, Bagani said, which is expected to have fallen in October compared to the month earlier.
Palm oil still targets Oct. 22 low of 4,816 ringgit per tonne, as the bounce from this level has ended, Reuters technical analyst Wang Tao said. TECH/C
($1 = 4.1480 ringgit)
(Reporting by Fransiska Nangoy and Fathin Ungku; Editing by Subhranshu Sahu and Rashmi Aich)
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