Malaysian palm oil futures dropped to a three-year low on Wednesday in its fifth day of declines in six, on expectations of rising inventory levels and tracking weakness in related edible oils. The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange was down 0.5 percent at 2,111 ringgit ($506.96) a tonne at the close of trade after earlier falling to 2,105 ringgit, its lowest since September 2015.
Trading volumes stood at 27,953 lots of 25 tonnes each at the end of the trading day.
"The market is still under pressure from end-stocks," said a Singapore based trader, referring to expectations of rising inventory levels in Malaysia.
Malaysia's palm oil stocks at end-October are forecast to rise to the highest in three years at nearly 3 million tonnes amid a seasonal rise in output and a slip in export demand, according to a Reuters survey last week.
Traders earlier said the market was down on weaker related edible oils but that prices should be bottoming at current levels, as traders look out for announcements from the government of Indonesia, the world's top producer and exporter of the edible oil.
At an industry conference last week, a government minister said Indonesia is considering reducing its levy on palm oil exports as the nation pushes to maintain its position in international markets for the commodity.
Palm oil prices are also affected by the movements of crude oil, as the edible oil is used as feedstock to make biodiesel.
In other related edible oils, the Chicago December soyabean oil contract was up 0.3 percent, while the January soyabean oil contract on the Dalian Commodity Exchange dropped 0.3 percent.
Meanwhile, the January palm oil contract declined 0.8 percent. Palm oil prices are affected by movements of other edible oils as they compete for a share in the global vegetable oil market. Palm oil may test a support at 2,099 ringgit per tonne, a break below which could cause a loss to 2,075 ringgit, according to Reuters market analyst for commodities and energy technicals Wang Tao.
Comments
Comments are closed.