Palm oil flat as China canola tariff cut, Indonesia B50 cancellation weigh on the market
Malaysian palm oil futures were little changed on Monday, as China's plans to slash import tariffs on Canadian canola and Indonesia's cancellation of its B50 biodiesel mandate weighed on the market, while upcoming festival demand lent some support.
The benchmark palm oil contract FCPOc3 for April delivery on the Bursa Malaysia Derivatives Exchange slid 3 ringgit, or 0.07%, to 4,069 ringgit ($1,004.20) a metric ton at the close. The contract rose 2.31% on Friday.
The market traded lower due to China reducing its import tariffs on Canadian canola to a combined rate of 15% from the current 84%, said Anilkumar Bagani, head of commodity research at Sunvin Group, a Mumbai-based brokerage.
An adjustment to the reduction in palm oil biofuel demand following Indonesia's announcement that it will not implement its mandatory B50 grade of palm oil-based diesel this year also weighed, said Bagani.
However, prices are seeing some support as palm oil's discount against soyoil and sunflower oil continues to attract buyers, he added.
"The upcoming festival season of Chinese New Year and Ramadan and seasonally low production months will also continue to support prices."
Cargo surveyors are due to release export estimates for January 1-20 on Tuesday.
Dalian's most-active soyoil contract DBYcv1 rose 0.23%, while its palm oil contract DCPcv1 added 0.35%. Soyoil on the Chicago Board of Trade BOcv1 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.
Oil prices fell 1%, reversing the previous session's gains, as civil unrest in Iran subsided, lowering the chance of a U.S. attack that could disrupt supply from the major Middle Eastern producer. O/R
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
The ringgit MYR=, palm's currency of trade, firmed 0.07% against the dollar, making the commodity slightly expensive for buyers holding foreign currencies.
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