SINGAPORE: Malaysian palm oil futures closed lower on Tuesday for the third consecutive session, as prospects of higher supplies weighed on prices, although a weak ringgit limited losses.
The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange fell 35 ringgit, or 0.9%, to 3,719 ringgit ($796.70) a metric ton at closing.
“Growth in palm oil production is much higher than the market estimate of a 2-3% increase,” said Anilkumar Bagani, commodity research head at Sunvin Group in India.
“End stocks in Malaysia were nearly 10% higher at the end of October compared to September as production has surpassed exports and consumption,” Bagani added.
Malaysia’s palm oil stocks at the end of October were at their highest since May 2019 as higher production overshadowed growing exports, a Reuters survey showed on Friday.
Palm oil slips for second day on rising supply outlook
Meanwhile, China imported 5.16 million metric tons of soybeans in October, customs data showed on Tuesday, a 25% surge from a year earlier but lower than analysts’ expectations as Brazilian soybeans continued to arrive at ports later than usual.
According to Refinitiv Commodities Research, delayed October cargoes will arrive in November and lift November imports to 12 million metric tons.
Dalian’s most-active soyoil contract fell 0.3%, while its palm oil contract was up 0.03%.
A rapidly progressing U.S. soybean harvest weighed on prices. Harvests were 91% done, behind the average estimate of 92% but ahead of the five-year average of 86%.
Soyoil prices on the Chicago Board of Trade fell 1.1%.
Global palm oil output is likely to drop next year due to El Nino, while demand from the edible oil and energy sectors is set to grow, supporting prices, leading industry analysts said on Friday.
Malaysian palm oil associations on Monday called for the government to review a windfall profit levy.
The Malaysian ringgit, palm’s currency of trade, weakened 0.8% against the dollar. A weaker ringgit makes palm oil more attractive for foreign currency holders.
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