Palm oil drops to near five-month low

Malaysian palm oil futures fell to a near five-month low on Wednesday evening, charting a third straight day of losses, on expectations of rising stockpiles and slowing demand. The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange was down 1.1 percent at 2,535 ringgit ($622.39) a tonne at the close of trade, its sharpest daily decline in over a week.
It earlier fell to an intraday low of 2,530 ringgit, its weakest since July 19. Palm is also down 2.6 percent so far this week, on track for a sixth week of losses. Traded volumes stood at 40,862 lots of 25 tonnes each on Wednesday evening. "Expectations of rising stocks is creating a bearish scenario, coupled with a slowdown in exports," said a trader in Kuala Lumpur. "Buying demand is slow."
Another attributed palm's decline to a technical selloff. Palm oil inventories in Malaysia are forecast to rise to the highest in nearly two years at the end of November, as a fall in exports outweighs a decline in production, a Reuters poll showed. Stockpiles are expected to swell 11.4 percent to 2.44 million tonnes from the end of October, while output is expected to fall 3 percent on-month to 1.95 million tonnes.
Exports are seen falling in November, down 6 percent at 1.45 million tonnes, the first monthly decline in five months. In other related oils, the January soyabean oil contract on the Chicago Board of Trade dropped 0.3 percent, while the January soyabean oil contract on the Dalian Commodity Exchange fell 0.1 percent. The Dalian January palm olein contract declined 0.4 percent. Palm oil prices are affected by movements in other edible oils as they compete for a share of the global vegetable oils market.