JAKARTA: Malaysian palm oil futures dropped on Monday, weighed down by weaknesses in rival edible oils on the Dalian exchange, while increased production continued to pressure prices.
The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange lost 92 ringgit, or 2.19 percent, to 4,115 ringgit (USD974.20) a metric ton at the close.
“Futures were weighed down by weaknesses in the Dalian market. There is also an increase in production, which continued to pressure prices. On the other side of the equation, we see good demand creation, which will eventually lead to better exports in November and December,” said Paramalingam Supram niam, director at Selangor-based brokerage Pelindung Bestari.
Dalian’s most-active soyoil contract lost 0.52percent, while its palm oil contract shed 1.55 percent. Soyoil prices on the Chicago Board of Trade (CBOT) fell 0.35 percent. Palm oil tracks the price movements of rival edible oils as it competes for a share of the global vegetable oils market.
Exports of Malaysian palm oil products rose 4.3percent month-on-month in October, independent inspection company AmSpec Agri Malaysia said, while they rose 5.2 percent, according to cargo surveyor Intertek Testing Services.
Indonesia exported 17.58 million tons of crude and refined palm oil in the January-to-September period, up 11.62 percent from the same period last year, the statistics bureau said on Monday.
Oil prices climbed on Monday after OPEC+ decided to hold off production hikes in the first quarter of next year, which eased rising fears of a supply glut, but weak factory data in Asia capped the gains.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock. The ringgit, palm’s currency of trade, weakened 0.31 percent against the dollar, making palm oil more attractive to buyers holding foreign currencies.
US soybean futures hit a 15-month high on Friday, posting their biggest monthly gains in almost five years on hopes of increased Chinese buying, traders said.
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