KUALA LUMPUR: Malaysian palm oil futures tumbled more than 4% on Monday, weighed down by a stronger ringgit and weakness in competing vegetable oils, even as supply concerns grew over flooding in the world’s second-largest producer.
The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange slid 179 ringgit, or 4.18%, to 4,108 ringgit ($894.50) a tonne.
The ringgit, palm’s currency of trade, strengthened 0.7% against the dollar, rising for a second straight session. A stronger ringgit makes the commodity more expensive for buyers holding other currencies.
Palm oil prices are likely to trade between 4,000 rinngit and 4,400 ringgit a tonne until the end of December due to flooding and a weaker ringgit, the state Malaysian Palm Oil Council (MPOC) said.
Disruptions to crude palm oil supplies in top producers Malaysia and Indonesia because of tropical storms are expected to continue into the first quarter of 2023, keeping prices strong in the near-term, Malaysian industry officials said.
Malaysia’s palm oil board warned of a tough 2023 for the market, with the persistence uncertainties in weather, geopolitics and economics that have already led to wide price swings this year.
Malaysian palm oil futures jump
Demand from major buyer China will likely recover next year as the country loosens its zero-COVID rules, with Indonesia expected to win a bigger market share than smaller rival Malaysia, analysts said.
Meanwhile, India’s palm oil imports in 2021/22 fell 4.8% from a year earlier as soyoil purchases jumped 45.3% to a record high after Indonesia restricted shipments of the tropical oil, Solvent Extractors’ Association of India (SEA) said, Dalian’s most-active soyoil contract slipped 1.5%, while its palm oil contract lost 2.4%. Soyoil prices on the Chicago Board of Trade were down 1.1%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
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