Palm flat as stockpile concerns cap gains
- Palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange gained 2 ringgit, or 0.04%, to 4,580 ringgit ($1,121.45) a metric ton
Malaysian palm oil futures were little changed, supported by firmer crude oil prices but tempered by concerns over record-high September stockpiles and a stronger ringgit.
- Impact of crude oil prices on palm oil.
- Expected record September palm oil inventories.
- Indian sunflower oil import decline and palm oil purchases.
KUALA LUMPUR: Malaysian palm oil futures were little changed on Tuesday, as gains from stronger crude oil prices were tempered by concerns of higher September stockpiles.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange gained 2 ringgit, or 0.04%, to 4,580 ringgit ($1,121.45) a metric ton by the midday break.
The market was supported by firmer crude oil prices and follow-through buying after Monday’s rebound, although expectations of high September inventories continued to cap gains, said David Ng, a proprietary trader at Kuala Lumpur-based trading firm Iceberg X Sdn Bhd.
Malaysia’s palm oil inventories are expected to hit an all-time high in September, topping the December 2018 peak, as production soared to record volumes outpacing sluggish export demand, a Reuters survey showed.
Oil prices made slight gains as security concerns in the Middle East kept a geopolitical risk premium in the market, even as resilient regional crude exports and a G7 emergency stockpile release eased supply concerns. Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
Soyoil prices on the Chicago Board of Trade were up 0.03%.
The Dalian Commodity Exchange is closed for a public holiday and will reopen on October 8.
Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market.
The ringgit, palm’s currency of trade, strengthened 0.02% against the dollar, making the commodity slightly more expensive for buyers holding foreign currencies.
Indian sunflower oil imports fell in September to their lowest level in more than four years after the Ukraine war disrupted shipments, prompting refiners to increase palm oil purchases to their highest level in seven months, five dealers said.
Palm oil may extend its bounce into a range of 4,656-4,677 ringgit per metric ton, as suggested by its wave pattern and a channel technique, Reuters technical analyst Wang Tao said.
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