Palm oil set to drop 9% for week as coronavirus panic grips market

KUALA LUMPUR: Malaysian palm oil futures were poised to fall 9 per cent this week after extending losses into a second straight session on Friday, as worsening panic over the coronavirus pandemic drove heavy selling across assets.

The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange fell 51 ringgit, or 2.24 per cent, to 2,226 ringgit ($519.12) early in the session.

Palm oil fell to levels last seen in October as growth concerns sparked by the virus outbreak outweighed a drop in February stockpiles and a pick up in exports ahead of the Muslim holy month of Ramadan.

FUNDAMENTALS

Global markets suffered record falls on Thursday as alarm over the coronavirus intensified, and governments around the world unveiled new measures to stem the spread of the disease that has infected more than 127,000 people worldwide.

Oil prices fell for a third day, with Brent crude set for its biggest weekly drop since 1991 as coronavirus panic and a price war between Saudi Arabia and Russia slammed the market. Weak crude oil futures make palm a less attractive option for biodiesel feedstock.

Dalian’s most-active soyoil contract fell 2.46 per cent, while its palm oil contract slipped 3.34 per cent. Soyoil prices on the Chicago Board of Trade were also trading down 2.39 per cent.

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