NEW DELHI: Malaysian palm oil futures dropped on Tuesday, dragged down by bleak demand from top overseas buyer India, even as industry data showed that stockpiles of the tropical oil slumped to their lowest levels in six months.
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange lost RM20, or 0.51 per cent, to RM3,864 (US$810.91) by midday.
Palm oil imports by India, the world's biggest importer of vegetable oils, in January dropped more than 12 per cent from a month ago to a three-month low as negative refining margins for crude palm oil prompted refiners to switch to rival soyoil.
Soyoil prices on the Chicago Board of Trade were up 0.61 per cent.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Palm oil stocks in Malayasia, the world's second-largest palm oil producer after Indonesia, at January-end fell more than expected to their lowest in six months as production plunged to the lowest level in nine months amid steady exports, the industry regulator said on Tuesday.
Oil prices were flat for a second straight day as uncertainty about the pace of potential U.S. interest rate cuts and the impact on fuel demand offset worries about Middle East tensions that could disrupt supply.
Stronger crude oil futures typically make palm a more attractive option for biodiesel feedstock.
The rebound in palm oil prices is likely to be capped by abundant supplies of rival soyoil and sunflower oil, which are "soft" oils available at discounts to tropical palm oil for the first time in more than a year.
Palm oil may fall into a range of RM3,845 to RM3,856 per metric ton, as it failed to break resistance at RM3,925. - Reuters