Malaysian palm oil falls on stockpile concerns, weak demand

KUALA LUMPUR: Malaysian palm oil futures fell for the fourth straight session on Wednesday, as expectations of rising inventories and weak demand weighed on the market.

The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange slid 42 ringgit, or 0.87percent, to 4,768 ringgit (USD1,169.49) a metric ton at the close.

The market is well aware that end-stocks will likely rise to 3 million metric tons, or slightly higher by September-end, driven by a double-digit increase in production, particularly in the state of Sabah, said Paramalingam Supramaniam, a director at Selangor-based brokerage Pelindung Bestari.

“Demand also remains sluggish and the market cannot escape the influence from both of these overarching variables,” he added. Cargo surveyors estimated that exports of Malaysian palm oil products for September 1 to 20 fell between 12.8percent and 24.7percent from a month earlier.

Dalian’s most-active soyoil contract fell 0.27percent, while its palm oil contract shed 1.43percent. Soyoil prices on the Chicago Board of Trade were down 0.63percent. Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market.

Oil prices held near their lowest in more than two weeks as improving Gulf crude supplies weighed on the market, though diesel refining margins hit a record high on potential restrictions to US diesel exports.

Weaker crude oil futures make palm a less attractive option for biodiesel feedstock. European Union soybean imports for the 2026/27 season that began in July had reached 2.67 million tons by September 20, down 14percent from a year earlier, while palm oil imports fell 26percent to 0.56 million tons, European Commission data showed.