JAKARTA: Malaysian palm oil futures recouped some losses as crude oil and US soy oil rebounded but still ended Tuesday’s afternoon trade lower as concerns of higher output and soft demand for the rest of the year remained.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange fell 0.31% to close the afternoon session at 3,530 ringgit ($765.89)a tonne, after dropping by as much as 3% earlier in the day.
It lost 9.28% in the past four trading days.
“A short covering-based recovery in CBOT soy oil and CME crude oil along with weaker ringgit helped CPO futures to recover a bit but overall trend remains down,” said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
Soyoil prices on the Chicago Board of Trade were trading 0.67% higher, while Dalian’s most-active soyoil contract fell 0.18%, while its palm oil contract dropped 2.45%.
Oil rose more than 1% on Tuesday from a nine-month low a day earlier, supported by supply curbs in the US Gulf of Mexico ahead of Hurricane Ian and a slight softening in the US dollar.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market, while stronger crude oil makes palm more attractive for biofuel feedstock.
Meanwhile, Malaysia’s ringgit weakened by 0.2% against the dollar on Tuesday, hitting its lowest in history. Weaker ringgit makes palm oil more cheaper for buyers holding US dollars.
Last Friday, industry analyst Dorab Mistry said Malaysian palm oil prices were seen plunging to 2,500 ringgit by the end of December, weighed down by improving production, demand destruction and a slowdown in major economies.
Exports of Malaysian palm oil products for Sep. 1-25 rose 18.9% versus the same period in August, cargo surveyor Societe Generale de Surveillance said on Tuesday.
Cargo surveyor Intertek Testing Services reported 20.9% export growth in Sept. 1-25, while independent inspection company AmSpec Agri said exports increased 18.6%.
Palm oil may retest a support at 3,427 ringgit per tonne, as it has pierced below the Sept. 8 low of 3,481 ringgit, Reuters technical analyst Wang Tao.
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