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VEGOILS-Palm topples in the middle of China tariff worries, weak need

Malaysian palm oil futures toppled on Thursday, as fears of U.S. tariffs troubled China and soft need for palm sparked a broad selloff in the veggie oils market.

The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange slid 140 ringgit, or 2.91%, to 4,675 ringgit ($ 1,047.50) a metric ton during the midday break.

The contract decreased 2.21% in the previous session.

The sell-off in Chicago soyoil overflowed into the Dalian oils, which then added to a decline in Malaysian palm futures, stated Paramalingam Supramaniam, director at Selangor-based brokerage company Pelindung Bestari.

Speculations that the inbound Trump administration will enforce a 40% tariff on China contributed to the sell-off in the vegetable oils market, he stated, including that the tariffs could shift China's purchase of US soybean and soyoil to Brazil and Argentina.

Dalian's most active soyoil contract fell 1.24%, while its palm oil agreement shed 3.3%. Soyoil costs on the Chicago Board of Trade were down 0.14%.

Palm oil tracks price movements of competing edible oils, as they compete for a share of the international vegetable oils market.

The demand for palm is likewise a considerable concern in November and December as India has obviously currently bought sufficient materials and as a result, arrivals are anticipated to be plentiful, he said.

Oil prices edged higher on supply concerns triggered by intensifying geopolitical tensions amidst the continuous war in between Russia and Ukraine.

Stronger crude oil futures make palm a more appealing alternative for biodiesel feedstock.

The ringgit, palm's currency of trade, enhanced 0.13% versus the dollar, making the product more expensive for purchasers holding foreign currencies.

U.S. soybean futures struck a two-week short on Wednesday and fell more than 3% on expectations of numerous South American soy harvests this year along with unpredictability about need for soy-based biodiesel fuel, experts said.

Palm oil may break support at 4,732 ringgit per metric lot, and fall under 4,647 ringgit to 4,679 ringgit variety, Reuters technical analyst Wang Tao said.

(source: Reuters)