JAKARTA: Malaysian palm oil futures fell on Tuesday on profit-taking, while declines in Chicago soyoil and crude oil prices added further pressure to the benchmark contract.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange was down 1.66% at 4,272 ringgit ($996.97) a metric ton at closing.
“Crude palm oil futures are down on profit-taking on the back of lacklustre Dalian performance while waiting for a further lead,” a Kuala Lumpur-based trader said, adding that the Dalian vegetable oils contract needs about 800 points to catch up to the benchmark. The benchmark palm oil contract had hit its highest closing in six months at 4,349 ringgit in the previous session and has gained nearly 7% so far in October.
Dalian Commodity Exchange’s soyoil contract rose 0.81% while its palm oil contract was up 2.51% as the market resumed trading after a week-long holiday break. Soyoil prices on the Chicago Board of Trade dropped 2.2%.
Oil World estimated that global palm oil production is expected to increase by 2.3 million metric tons in 2024/25 from the previous season, senior analyst David Mielke told an industry conference on Tuesday.
Glenauk Economics estimated Malaysia’s palm oil production is estimated to come in at 19.4 million tons in 2024, while output in the world’s biggest exporter Indonesia was likely to be 1 million tons lower than the 54.84 million tons produced in 2023, Glenauk’s managing director Julian McGill said at the same event. Palm oil tracks the price movements of rival edible oils, as they compete for a share of the global vegetable oils market.
Crude oil prices fell on Tuesday as traders booked profits after prices rallied to their highest in over a month in the previous session amid fears that the Middle East could be on the brink of a region-wide war.
Brent crude futures for December were down 1.95% at $79.35 a barrel by 0807 GMT. Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
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