Palm extends losses, falls nearly 2% on price rally, sluggish export demand

KUALA LUMPUR: Malaysian palm oil futures fell nearly 2% on Wednesday, extending losses for a second session, after a recent rally hurt its competitiveness against rival soyoil, while sluggish exports fuelled concerns over rising inventories.

The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange was down 93 ringgit, or 1.88%, at 4,853 ringgit ($1,206.31) a metric ton at the close.

The contract fell 1.43% in the previous session.

Palm’s recent price rally has eroded some demand as soybean oil prices at Indian ports are now cheaper than palm oil, while refining margins remain razor thin, said Paramalingam Supramaniam, director at brokerage Pelindung Bestari.

He added that without a significant pickup in demand, inventories would likely rise and more so as palm heads into the peak production months of September and October.

Palm oil rallied for five straight sessions through August 21, gaining 6.54%, and closed above 5,000 ringgit for the first time since December 2024.

Cargo surveyors estimated that exports of Malaysian palm oil products for August 1-25 fell between 11.4% and 20% from a month earlier.

Dalian’s most-active soyoil contract rose 0.19%, while its palm oil contract shed 0.62%. Soyoil prices on the Chicago Board of Trade were down 1.68%.

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

Oil prices fell more than $2 a barrel to a two-week low as talks between Iran and Oman revived hopes that the Strait of Hormuz could reopen and remove shipping constraints affecting supply in the key Middle East region.

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

The ringgit palm’s currency of trade, strengthened 0.54% against the dollar, making the commodity more expensive for buyers holding foreign currencies.