Palm oil falls on weaker Dalian oils, profit taking

JAKARTA: Malaysian palm oil futures fell on Wednesday after two straight sessions of gains, tracking weaker Dalian vegetable oils and profit-taking as palm oil’s narrower discount to soyoil weighed on the market.

The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange lost 51 ringgit, or 1.07%, to 4,697 ringgit ($1,150.38) a metric ton at close.

“The CPO futures were seen trading lower today, giving up some of the gains from earlier this week on profit-taking as soyoil continued to be seen offered at relatively tighter spread against palm oil,” said Anilkumar Bagani, the research head of Mumbai-based vegetable oil brokerage Sunvin Group.

He said weakness in Dalian’s palm olein futures during Asian hours also weighed on the market.

Dalian’s most-active soyoil contract fell 0.21%, while its palm oil contract lost 0.71%. Soyoil prices on the Chicago Board of Trade were down 0.04%.

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

Meanwhile, Malaysia has lowered its September crude palm oil reference price to a level that maintains the export duty at 10%, a circular on the Malaysian Palm Oil Board website showed on Wednesday.

Malaysia’s SD Guthrie, one of the world’s largest palm oil producers, said on Tuesday it expects production to be impacted in 2027 and 2028 with El Niño set to bring drier and hotter weather.

Oil prices rose on Wednesday after attacks on two ships reinforced worries about disruptions to Middle East supplies, while industry data showing swelling inventories of U.S. crude might keep bulls in check.

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

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