August 2, 2019 / 5:49 AM / 22 days ago

Palm on track for second session of losses on weaker overnight soyoil

KUALA LUMPUR (Reuters) - Malaysian palm oil futures extended losses at the midday break on Friday, weighed by weakness in overnight U.S. soyoil on the Chicago Board of Trade (CBOT) which came under pressure after U.S. President Donald Trump’s fresh tariff threat against China.

A worker unloads palm oil fruit bunches from a lorry inside a palm oil mill in Bahau, Negeri Sembilan, Malaysia January 30, 2019. REUTERS/Lai Seng Sin/Files

Trump said on Thursday he would impose a 10% tariff on $300 billion of Chinese imports from Sept. 1 and could raise tariffs further if China’s President Xi Jinping fails to move more quickly to strike a trade deal.

The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange was last down 0.3% at 2,058 ringgit ($495.66) per tonne at the midday break, in line for a second session of losses.

Palm oil is down 0.4% on-week so far, on track to snap two previous weeks of wins.

The vegetable oil may test a support at 2,038 ringgit per tonne, with a good chance of breaking this level and falling to 1,991 ringgit, said Wang Tao, a Reuters market analyst for commodities and energy technicals.

“The bearish market sentiment in soybeans on additional U.S.-China trade tariff may stoke a lower opening of palm prices,” said a Kuala Lumpur-based futures trader, however adding that the weakening of the ringgit could limit losses.

Depreciation in the ringgit, palm’s currency of trade, usually supports the edible oil by making it cheaper for foreign buyers.

The ringgit, currently trading at over one-month lows, was last down 0.2% against the dollar at 4.1520.

In other related oils, U.S. soyoil futures on the CBOT had fallen 0.3% on Thursday, but were last up 0.04% as of 0527 GMT on Friday.

U.S. soybean futures edged up on Friday, though the oilseed was poised to record its biggest weekly loss in three months amid an escalation in a year-long trade dispute between Washington and Beijing.

Meanwhile, the September soyoil contract on the Dalian exchange rose 0.5% and the Dalian September palm oil contract gained 1.1%.

Palm oil prices are affected by movements in related oils that compete in the global vegetable oils market.

($1 = 4.1520 ringgit)

($1 = 69.3100 Indian rupees)

($1 = 6.9361 Chinese yuan)

Reporting by Emily Chow; Editing by Shounak Dasgupta

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