Palm oil eases for second session on weaker demand

• Malaysia expects the country's palm oil stocks to end the year at 2.1 million tonnes or remain at the current level of 2.25 million tonnes.
• Malaysia's palm oil inventories fell to a three-month low in November due to a seasonal decline in production.
• Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

KUALA LUMPUR: Malaysian palm oil futures fell for a second straight day on Thursday, dragged lower by slowing demand, although a decline in inventories limited the losses.

The benchmark palm oil contract, for February delivery, on the Bursa Malaysia Derivatives Exchange dropped 17 ringgit, or 0.6pc, to 2,841 ringgit ($681.29) by the midday break.

Palm prices have lost ground over the past two sessions due to expectations of 10pc-12pc lower demand in December and India's proposal to raise tax on edible oils, said Marcello Cultrera, institutional sales manager at Kuala Lumpur-based Phillip Futures.

However, the lower-than-expected production levels and rapidly declining inventories in Malaysia and Indonesia for the December-March period are still supportive of the current bull market, he added.

Malaysia expects the country's palm oil stocks to end the year at 2.1 million tonnes or remain at the current level of 2.25 million tonnes, according to the state news agency Bernama.

Poor rainfall and lower fertiliser use in top producers Indonesia and Malaysia earlier this year is likely to curb yields of the tropical oil in the first half of 2020, according to traders and analysts.

Malaysia's palm oil inventories fell to a three-month low in November due to a seasonal decline in production. However, the decline was slower than expected.

Exports of Malaysian palm oil products during Dec. 1-15 fell between 15.5pc and 18.6pc from a month earlier, data from cargo surveyors showed.

Dalian's most-active soyoil contract lost 0.03pc, while its palm oil contract fell 0.3pc. Soyoil prices on the Chicago Board of Trade traded down 0.2pc.

US grain and soybean futures eased on Wednesday as the markets paused after rallying this week on demand hopes fuelled by a US-China trade agreement. The long-awaited agreement included a Chinese commitment to expand purchases of US farm products.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.