KUALA LUMPUR: Malaysian palm oil futures fell on Thursday as crude oil prices plunged to their lowest in four years, stoking worries that the tropical oil may lose its appeal as an additive in biofuels, while rumours of palm cargo defaults in India spooked investors.
The trader added that rumours about Indian buyers defaulting 30,000-60,000 tonnes of crude palm oil cargoes also aided the speculative sell-off in palm oil.
The benchmark February contract on the Bursa Malaysia Derivatives Exchange had inched down 1.7 per cent to 2,201 ringgit ($657) per tonne by Thursday’s close. Total traded volume stood at just 21,950 lots of 25 tonnes, below the usual 35,000 lots.
Some commodity fund managers say oil prices could slide to $60 per barrel if OPEC does not agree to a significant output cut of at least 1 million barrels per day at its meet.
Such a fall would dent palm oil’s demand for discretionary biodiesel blending and spell trouble for biofuel mandate targets in top growers Indonesia and Malaysia.
Published in Dawn, November 28th, 2014
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