Palm hits one-month low as stockpile concerns weigh

KUALA LUMPUR: Malaysian palm oil futures dropped to a one-month low on Tuesday, as mounting concerns over growing stockpiles weighed on the market.

The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange slid 97 ringgit, or 2.09%, to 4,552 ringgit ($1,117.88) a metric ton, its lowest close since October 7.

Palm oil futures traded cautiously and lower as concerns over elevated inventories continued to limit gains, said David Ng, a proprietary trader at Kuala Lumpur-based trading firm Iceberg X Sdn Bhd.

Malaysia’s palm oil inventories are set to hit a new peak in October, as a rebound in exports failed to offset another month of record production, a Reuters survey showed.

Cargo surveyors estimated that exports of Malaysian palm oil products for October rose between 45.4% and 73.5% from a month earlier.

Dalian’s most-active soyoil contract fell 1.38%, while its palm oil contract   shed 0.99%. Soyoil prices on the Chicago Board of Trade were down 0.18%.

Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market.

Oil prices rose more than $1, as an Iranian official said a deal to end the war was far off, while the United States struck Iran’s Qeshm Island, fuelling concerns over the escalation of hostilities and risks to energy supplies.

Stronger crude oil futures make palm oil a more attractive option for biodiesel feedstock.

The ringgit, palm’s currency of trade, weakened 0.17% against the dollar, making the commodity slightly cheaper for buyers holding foreign currencies.