KUALA LUMPUR: Malaysian palm oil futures hit a six-week closing low on Wednesday, as traders weighed rising supplies outlook, COVID-19 restrictions in key buyer China, and weakness in rival soyoil.
The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange slid 93 ringgit, or 2.45%, to 3,704 ringgit ($823.11) a tonne, its lowest since July 25.
It had earlier hit an intraday low of 4%.
High palm oil stocks and the seasonal stronger output from top producing countries Indonesia and Malaysia should keep global supplies abundant, pressuring the market, Refinitiv Commodities Research said in a note.
Increased global supply prospects from sunseed oil and soybean oil are also bearish factors, it added.
A Reuters poll ahead of Malaysian Palm Oil Board data pegged a jump in inventories to 2.03 million tonnes as production expands.
Weak economic data from key consumer China stoked concerns over demand, as China’s stringent zero-COVID policy has kept cities such as Chengdu under lockdown.
**Palm hits six-week closing low on weaker crude, high stocks outlook**
Dalian’s most-active soyoil contract fell 3.4%, while its palm oil contract dropped 2.8%.
Soyoil prices on the Chicago Board of Trade were down 1% on concerns that Argentina’s decision to offer a preferential exchange rate for soybean exports during September could dampen global demand for U.S. supplies.
Limiting losses, the ringgit, palm’s currency of trade, fell 0.04% against the dollar to its lowest since 1998, making the commodity cheaper for holders of foreign currency.
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