KUALA LUMPUR: Malaysian palm oil futures closed lower on Thursday, snapping a two-day gaining streak, as investors worried that aggressive monetary policy tightening by major central banks would dampen global economic growth and the demand for commodities.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange slid 58 ringgit, or 1.49%, to 3,829 ringgit ($838.77) a tonne.
World stocks were close to a 2-year low and Japan unilaterally intervened in FX markets for the first time since 1998 on Thursday as the U.S. Federal Reserve’s aggressive rate hike signals had put markets on the run.
The Malaysian Palm Oil Board (MPOB) said the nation’s palm oil stocks could rise to a 3-1/2-year high of 2.5 million tonnes by the end of 2022, as exports are likely to take a hit from rival Indonesia waiving export levies to bring down stockpiles.
Indonesia’s palm oil stocks could drop sharply by the end of December from record levels as Jakarta’s export levy waiver has accelerated exports, the Indonesia Palm Oil Association (GAPKI) said.
In related oils, Dalian’s most-active soyoil contract rose 1%, while its palm oil contract gained 2%. Soyoil prices on the Chicago Board of Trade were up 0.6%.
“The oils market, led by palm as always, is wrestling with the indigestion caused by the enforced build-up of record stocks inside Indonesia, which are now struggling to get out of the country,” James Fry, chairman of commodities consultancy LMC International, told the Globoil conference in Agra, India.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
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