Palm drops more than 2pc as Omicron variant worries weigh

KUALA LUMPUR: Malaysian palm oil futures fell more than 2% on Thursday to hit their lowest in nearly two months, as concerns about the Omicron coronavirus variant and its impact overshadowed an industry forecast of lower November output.

The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange slid 99 ringgit, or 2.11%, to 4,585 ringgit ($1,085.72) a tonne in early trade, hitting its lowest since Oct. 4.

Heavily mutated Omicron is rapidly becoming the dominant variant of the coronavirus in South Africa less than four weeks after it was first detected there, and the United States on Wednesday became the latest country to identify an Omicron case within its borders.

The Southern Peninsula Palm Oil Millers’ Association (SPPOMA) estimated November production fell 6.8% from the month before, traders said on Wednesday.

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Top producer Indonesia will need to increase the bio-content of its palm oil-based biodiesel to 40% by 2024 or risk missing its renewable energy targets, a senior official said on Wednesday.

Dalian’s most-active soyoil contract fell 0.6%, while its palm oil contract eased 0.5%. Soyoil prices on the Chicago Board of Trade were down 0.6%.

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 resume its drop towards 4,555 ringgit per tonne, as its consolidation around a support at 4,676 ringgit may have completed, Reuters technical analyst Wang Tao said.

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