BEIJING: Malaysian palm oil futures ended lower for a second day on Monday, weighed by a strengthening ringgit and expectations of a rise in October inventory and output.
The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange slid 16 ringgit, or 0.42%, to 3,752 ringgit ($809.84). The ringgit, palm’s currency of trade, rose 1.97% against the dollar, making the commodity more expensive for buyers holding foreign currencies.
“Prices also cooled down due to higher-than-estimated production forecasts for Malaysian palm oil during October,” said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group. The Malaysian Palm Oil Association has pegged a 7.13% increase in October production, Bagani said.
Investors are also awaiting the board’s supply and demand data due on Friday. Stockpiles at the end of October were at their highest since May 2019 as higher production outpaced growing exports and boosted inventories during the month, a Reuters survey showed last Friday. Global palm oil output is likely to drop next year due to the impact of the El Nino weather pattern, while demand from the edible oil and energy sectors is set to grow, supporting prices, leading industry analysts said on Friday.
Top producer Indonesia’s output is seen dropping at least a million metric tons next year, while output from rival Malaysia is seen unchanged, analyst Dorab Mistry said.
Indonesia’s domestic palm oil consumption for biodiesel will exceed consumption for food for the first time in 2023, the Indonesia Palm Oil Association said on Friday.
Dalian’s most-active soyoil contract rose 0.6%, while its palm oil contract gained 0.3%. Soyoil prices on the Chicago Board of Trade were up 1.2%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
KUALA LUMPUR: Malaysian palm oil associations on Monday called for the government to review a windfall profit levy on the palm oil industry.
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