NEW DELHI: Malaysian palm oil futures closed lower on Thursday due to a drop in overseas demand for the tropical oil from top buyers such as India and China.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange was down 2.8% at 3,608 ringgit ($763.60) a metric ton at closing.
Palm oil futures dropped 6.06% on a monthly basis in September after posting two consecutive monthly gains.
The Dalian Commodity Exchange is closed from Sept. 29 to Oct. 6 for the Mid-Autumn Festival and National Day.
“We have seen poor demand from both China and India, and that’s the reason that prices have dropped,” said a New Delhi-based trader.
Edible oil imports by India, the world’s biggest buyer of cooking oils, fell 19% in September from August as refiners curtailed purchases by 26% after inventories jumped to a record.
Soyoil prices on the Chicago Board of Trade were down 1.3%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Indonesia’s Palm Oil Association expects a 5% increase in the country’s output of the commodity this year and sees stocks at around 3.2 million metric tons by the year end.
Exports of Malaysian palm oil products for September were seen rising between 5.4% and 8.1%, data from independent inspection company AmSpec Agri Malaysia and cargo surveyor Intertek Testing Services showed.
Indonesia raised its crude palm oil reference price to $827.37 a ton for the Oct. 1-15 period, but kept export tax and levy for crude palm oil unchanged at $33 and $85 per ton, respectively.
Malaysian palm oil is expected to trade between 3,700 and 4,500 ringgit per metric ton from now until mid-2024, as an El Niño weather pattern threatens supplies amid rising demand, analysts said.
Palm oil may break a support of 3,686 ringgit per metric ton and fall to the Sept. 21 low of 3,637 ringgit, as its consolidation above the support of 3,686 ringgit is ending.
Oil prices fell by more than $1 on Thursday, extending the previous session’s sharp losses as an uncertain demand outlook overshadowed any boost from an OPEC+ panel maintaining oil output cuts to keep supply tight.