Palm dips as worries of new Covid-19 cases drag sentiment

KUALA LUMPUR: Malaysian palm oil futures fell 0.42% on Wednesday, as concerns over rising new coronavirus infections weighed on investors' mood.

The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange dropped to 2,346 ringgit a tonne by 0256 GMT.

Palm oil futures ended higher on Tuesday, helped by expectations of importers stocking up on the commodity in case of further coronavirus-led lockdowns and a recovery in prices of rival oils.

FUNDAMENTALS

Oil prices retreated on Wednesday, weighed down by an increase in U.S. crude inventories and worries about a potential second wave of the COVID-19 pandemic.

Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.

Dalian's most-active soyoil contract lost 0.14%, while its palm oil contract rose 1.13%. Soyoil prices on the Chicago Board of Trade shed 0.5%.

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

Palm oil may end its bounce around a resistance at 2,388 ringgit per tonne, and then resume its drop, Reuters technical analyst Wang Tao said.

MARKET NEWS

Asian share markets took a breather on Wednesday as a resurgence of coronavirus cases challenged market confidence in a rapid economic recovery, even as the rebound in U.S. retail sales in May broke all records.