Palm closes lower on rising stockpile concerns

KUALA LUMPUR: Malaysian palm oil futures closed lower on Tuesday as concerns over rising September stockpiles and weaker crude oil prices weighed on the market.

The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange shed 18 ringgit, or 0.39%, to 4,560 ringgit ($1,117.10) a metric ton at the close.

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.

Crude oil dropped over 2% as rising Middle Eastern exports and a G7 emergency diesel and crude stockpile release eased supply concerns, though lingering security risks in the region capped further losses. Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.

Soyoil prices on the Chicago Board of Trade were down 0.58%. 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 0.07% 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.