Palm oil extends falls on cheaper rivals, profit-taking

Malaysian palm oil futures fell for a second straight session on Tuesday, tracking cheaper rival oils on the Dalian Commodity Exchange and the Chicago Board of Trade, and as production recovered.

The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange declined 1.6% to 2,629 ringgit ($619.32) a tonne in early trade.

It had risen for three sessions through Friday, hitting a five-and-a-half-month high, as heavy rains fuelled worries about output.

"Palm oil prices are down on profit-taking," said Anilkumar Bagani, research head of Sunvin Group, a Mumbai-based vegetable oil broker.

"It (palm) adjusted its spread over soybean oil and was also pressured by a recovery in palm oil production pace."

Two leading industry analysts told Reuters last week that palm oil prices would fall by the fourth quarter due to higher output and inventory levels, dampening a recent rally.

Dalian soyoil and palm oil both fell 1.7%, while CBOT soyoil was down 1.6%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

The ringgit rose 0.1% against the dollar, making palm oil more expensive for holders of foreign currencies.

FUNDAMENTALS

U.S. soybean futures fell more than 0.5% as the U.S. Department of Agriculture said crop conditions were above market expectations, pushing prices to a six-day low.

Gold rocketed to record peaks at $1,975 while the U.S. dollar plumbed two-year lows as investors wagered the Federal Reserve would reaffirm its super-easy policy outlook this week, and a tolerance for higher inflation.

Oil prices rose for a third straight day, buoyed by support for demand coming from efforts to stimulate the U.S. economy's recovery from the coronavirus crisis and a weakening of the dollar that makes crude cheaper for global buyers.