VEGOILS-Palm drops more than 3% as crude oil slumps on US-Iran ceasefire

KUALA LUMPUR, April 8 (Reuters) - Malaysian palm oil futures tumbled more than 3% on Wednesday, pressured by a sharp drop in crude oil prices following a U.S-Iran ceasefire deal.

The benchmark palm oil contract FCPOc3 for June delivery on the Bursa Malaysia Derivatives Exchange slid 150 ringgit, or 3.15%, to 4,615 ringgit ($1,159.55) a metric ton by the midday break, extending losses to a third straight session.

Palm oil prices are currently tracking developments in the Middle East conflict closely, mirroring movements in crude oil prices, said Sandeep Singh, director of The Farm Trade, a Kuala Lumpur-based consulting and trading company.

Oil prices dived, stocks surged and the dollar was knocked back as the two-week Middle East ceasefire sparked a relief rally, fuelled by hopes that oil and gas flows through the Strait of Hormuz could resume. O/R

Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.

Singh said palm oil prices were expected to find support at about 4,500 ringgit, underpinned by a possible B20 biodiesel mandate in Malaysia and lower inventory levels.

Malaysia plans to expand its palm-based B20 biodiesel programme nationwide in phases, taking into account the price sensitivity of palm oil relative to petroleum prices, the plantation and commodities minister said.

Dalian's most-active soyoil contract DBYcv1 fell 2.73%, while its palm oil contract DCPcv1 shed 3.76%. Soyoil prices on the Chicago Board of Trade BOcv1 were down 3.63%.

Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market.

The ringgit MYR=, palm's currency of trade, strengthened 1.19% against the dollar, making the commodity more expensive for buyers holding foreign currencies.

Palm oil may revisit its recent low of 4,713 ringgit per ton, the ending point of a wave a from 4,919 ringgit, Reuters technical analyst Wang Tao said. TECH/C

($1 = 3.9800 ringgit)

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