KUALA LUMPUR: Malaysian palm oil futures declined on Thursday after trading in a tight range, as traders weighed rising inventories against weak ringgit-led demand prospects.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange fell 73 ringgit, or 1.95%, to 3,663 ringgit ($781.02) a tonne.
Palm rose earlier in the day as the ringgit, palm’s currency of trade, fell 0.21% against the dollar, making the commodity cheaper for holders of foreign currency.
“The ringgit continued to depreciate to a fresh 24-year low following three successive months of U.S interest rate hikes, but lower ringgit alone is not sufficient to entice prospect of higher exports,” Sathia Varqa, co-founder of Palm Oil Analytics (POA) said in a conference in Malaysia’s Sabah state.
Rising supply and escalating negative macro factors, including rising inflation and interest rates, are depressing prices, Varqa added.
Palm oil prices will remain volatile, Varqa said, adding that the contract will trend 3,700-4,000 ringgit in October to November, before declining further.
LMC International, meanwhile, said palm oil prices will continue to decline to around 3,200 ringgit in the first quarter of 2023, and remain below 3,500 ringgit into the second half of that year as stocks build due to stiffer competition in larger rival Indonesia.
India’s palm oil imports in September jumped to their highest in a year, boosted by strong demand ahead of the peak festival season and a steep discount to rival oils, a leading trade body said on Thursday.
Dalian’s most-active soyoil contract rose 1.7%, while its palm oil contract fell 0.8%. Soyoil prices on the Chicago Board of Trade were fell 0.6%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.