Palm oil falls on weaker rival oils, crude; gains 1.7% for the week

JAKARTA: Malaysian palm oil futures closed lower on Friday, tracking weaker rival edible oils on the Dalian and Chicago exchanges, as well as crude oil, but still posted a weekly gain.

The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange fell 38 ringgit, or 0.77%, to 4,898 ringgit ($1,200.49) a metric ton at the close. The contract gained 1.74% for the week.

“FCPO futures remained in negative territory on Friday, mirroring selling pressure across the broader commodity complex during Asian trading hours,” a Kuala Lumpur-based trader said.

Dalian’s most-active soyoil contract fell 1.57%, while its palm oil contract lost 2.14%. Soyoil prices on the Chicago Board of Trade were down 0.77%.

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

Market participants are monitoring an official announcement from the Indian government on a potential reduction in import tariffs, which could have implications for Malaysian palm oil demand, the trader said.

Oil prices fell 2% on Friday, extending losses for a third straight session as easing concerns over Saudi supply disruptions outweighed concerns about a widening of conflict across the Middle East.

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

Palm oil output in Indonesia’s major producing region, Kalimantan, could fall 12-15% in the fourth quarter, with plantations hit by prolonged dry weather and widespread fires, an analyst said on Wednesday.

The ringgit, palm’s currency of trade, gained 0.49% against the US dollar, making the commodity more expensive for buyers holding foreign currencies.