KUALA LUMPUR: Malaysian palm oil futures extended losses for a third straight session on Tuesday, as weakness in rival edible oils and OPEC+ plans to boost output weighed on the market, though the contract was still on track for a quarterly gain.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange slid 38 ringgit, or 0.87%, to 4,347 ringgit ($1,031.81) a metric ton at the midday break.
The contract has so far gained 9.06% this quarter.
The palm oil market was pressured by weakness in rival oilseeds.
The bearish sentiment across the vegetable oil complex has persisted as crude oil prices fell sharply overnight following news of OPEC+ plans to raise production, a Kuala Lumpur-based trader said.
“Dalian palm olein also showed selling pressure ahead of China’s National Day and Mid-Autumn Festival holiday from October 1 to 8,” the trader added.
Dalian’s most-active soyoil contract fell 0.59%, while its palm oil contract shed 0.54%. Soyoil prices on the Chicago Board of Trade were down 0.2%.
Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market.
Oil prices fell as another anticipated production increase by OPEC+ and the resumption of oil exports from Iraq’s Kurdistan region via Turkey reinforced the outlook for a looming supply surplus.
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
Cargo surveyors are expected to release their September export estimates later in the day.
The ringgit, palm’s currency of trade, weakened 0.05% against the dollar, making the commodity slightly cheaper for buyers holding foreign currencies.
Malaysia’s palm oil stocks are expected to decline in the coming months, ending the year at around 1.7 million metric tons, as a seasonal slowdown in production coincides with rising exports to meet festive season demand, the Malaysian Palm Oil Board said.
Palm oil may retest support at 4,366 ringgit per metric ton, a break below which could open the way toward 4,309 ringgit to 4,342 ringgit range, Reuters technical analyst Wang Tao said.
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