Malaysian palm oil futures hit a 16-month low on Thursday, weighed down by low demand and high stockpiles, as well as weakness in edible oils on China's Dalian Commodity Exchange. The benchmark palm oil contract for February delivery
on the Bursa Malaysia Derivatives Exchange dropped as much as 1.6 percent to its lowest since August 8, 2016, at 2,418 ringgit, before settling down 0.2 percent at 2,452 ringgit a tonne at the close of trade. Palm oil has been on a downward trend recently, shedding 5.8 percent so far this month after declining 7.5 percent in November. It has dropped 1.1 percent so far this week in what could be its seventh straight weekly fall.
Trading volumes stood at 72,478 lots of 25 tonnes each on Thursday evening. "Dalian is down a lot. As palm is weighed down by bumper stocks and slow demand, we drop with a bit of weakness externally," said a Kuala Lumpur-based trader, referring to related edible oils on the Dalian Commodity Exchange.
Palm oil prices are affected by other edible oils as they compete for a share in the global vegetable oils market. The January soybean oil contract on the Dalian Commodity Exchange was down 1.7 percent, while the Dalian January palm olein contract dropped 1.9 percent.
In Malaysia, stocks at the end of November increased to 2.56 million tonnes, the highest since late 2015, while data from cargo surveyors showed exports in the first 10 days of December fell 16-22 percent from a month earlier. Palm oil demand usually weakens at the end of the year as it solidifies in cold temperatures, leading buyers such as China and Europe in the northern hemisphere to reduce purchases. In other related oils, the January soybean oil contract on the Chicago Board of Trade fell 0.5 percent.
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