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VEGOILS - Palm slips due to weak Chicago crude oil and soyoil, Trump tariff woes

Malaysian palm futures declined on Friday as a result of lower Chicago soyoil prices and crude oil, while President Donald Trump’s reciprocal tariffs fueled uncertainty about global trade. This fueled fears about inflation and slowing growth.

At midday, the benchmark palm oil contract on Bursa Malaysia's Derivatives exchange for June delivery fell 126 ringgit or 2.81% to 4,363 Ringgit ($988.00), a metric tonne.

This week, the contract has fallen by 1.27%.

A Kuala Lumpur based trader stated that crude palm oil futures fell due to the uncertainty surrounding global trade after Trump's tariff announcement.

The trader reported that palm oil prices dropped due to a drop in crude oil as well as soybean oil.

"Liquidations have been heavy since last night, and they continue to be so today at midday. The physical market is still strong but futures are on a lower note.

Prices of soyoil on the Chicago Board of Trade have fallen by 0.4%. Dalian Commodity Exchange will be closed on Friday for Qingming Festival. It will reopen Monday.

As palm oil competes to gain a share in the global vegetable oils industry, it tracks the price changes of competing edible oils.

The price of oil fell further in the early Asian trading and was on track for its worst week in several months due to new U.S. Tariffs. This further fueled concerns about a possible global trade war which could impact demand.

Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.

As Trump's tariffs caused fears about steep price increases in the largest consumer market, several countries have vowed to escalate a trade conflict with the U.S.

The palm ringgit's currency has strengthened by 0.54% compared to the U.S. Dollar, increasing the price of the commodity for buyers who hold foreign currencies.

Technical analyst Wang Tao stated that palm oil could retest its support level of 4,347 ringgits per metric ton. A break below this price would trigger a drop into the range 4,266-43,303 ringgits.

(source: Reuters)