JAKARTA: Malaysian palm oil futures declined for a fourth consecutive session on Wednesday and were poised for a second monthly drop, weighed down by weakness in rival edible oils, Indonesia’s output forecast and a strong ringgit.
The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange lost 72 ringgit, or 1.67%, to 4,245 ringgit ($1,004.97) a metric ton by the midday break.
The contract hit its lowest since August 7 earlier in the session.
“Bursa Malaysia CPO futures opened gap lower today in continuation of the weakness started early this week due to the uncertainty of clouds over Indonesian B50 biodiesel mandate, GAPKI’s forecast of a 10% increase in Indonesian palm oil production this year,” said Anilkumar Bagani, research head of Mumbai-based vegetable oil broker Sunvin Group.
Indonesia’s palm oil output could rise to around 56 million metric tons this year, higher than earlier projections, with production supported by favourable weather and strong prices, Indonesia’s palm oil association GAPKI said.
A sell off of palm olein and soyoil in Dalian Commodity Exchange and weakness in overnight Chicago soyoil futures added pressure to the contract, he added.
Dalian’s most-active soyoil contract fell 1.19%, while its palm oil contract lost 2.22%. Soyoil prices on the Chicago Board of Trade eased 0.53%.
Palm oil tracks price movements of rival edible oils as it competes for a share of the global vegetable oils market.
Indonesia’s palm oil stocks dropped slightly in August to 2.54 million metric tons, 1% lower than a month earlier, with falling output offsetting a decline in exports, Indonesia’s palm oil association GAPKI said on Tuesday.
Oil prices edged lower, extending a three-day slide, as doubts about the effectiveness of Russia sanctions and a potential OPEC+ output increase pressured the market.
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
The ringgit, palm’s currency of trade, strengthened 0.17% against the dollar, making palm oil more expensive for buyers holding foreign currencies.
Palm oil FCPOc3 is expected to stabilise around support at 4,269 ringgit per metric ton and bounce, said Reuters technical analyst Wang Tao.
Comments
Comments are closed for this article.