Palm falls for second session on stockpile fears

KUALA LUMPUR: Malaysian palm oil futures dropped for a second session on Wednesday, weighed down by concerns over rising stockpiles, though firmer crude oil prices limited losses.

The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange slid 36 ringgit, or 0.79%, to 4,524 ringgit ($1,107.20) a metric ton at close.

The market remained under pressure, particularly in nearby contracts amid high palm oil inventories, a Kuala Lumpur-based trader said. “Prices failed to return to positive territory despite firmer crude oil prices,” the trader added.

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.

Soyoil prices on the Chicago Board of Trade fell 0.64%. The Dalian Commodity Exchange is closed for a public holiday and will reopen on Thursday.

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

Crude oil prices were stable, with Brent futures holding above $100 a barrel, as investors weighed higher Gulf exports against ongoing supply risks from the Middle East conflict and a storm heading for oil-producing regions in the United States.

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

The ringgit, palm’s currency of trade, weakened 0.1% against the dollar, making the commodity slightly cheaper for buyers holding foreign currencies.

Meanwhile, Indonesia’s forestry task force handed over nearly 260,000 hectares (642,474 acres) of seized land to the country’s forestry ministry, with more than half to be transferred to Agrinas Palma Nusantara, the state-run palm oil plantation firm.