Palm closes near 8-month low on inventory worries, weaker rival oils

KUALA LUMPUR: Malaysian palm oil futures slipped more than 2% on Thursday to close near an eight-month low as concerns over potentially larger-than-expected stocks and output, alongside weaker rival vegetable oils, pressured the market.

The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange slid 121 ringgit, or 2.69%, to 4,375 ringgit ($1,081.31) a metric ton, the lowest closing price since March 6.

The market continued its bearish stint amid fears of a larger inventory increase as production is expected to rise more than the recent estimates, said Anilkumar Bagani, head of research at Mumbai-based vegetable oil broker Sunvin Group.

Indonesia may also accelerate palm oil exports over the next two months to benefit from lower export tax brackets and avoid a potential Danantara transaction fee on export registrations from January, Bagani added.

A Reuters survey showed Malaysia’s palm oil inventories likely rose 6.8% from September’s record 3.51 million tons to 3.75 million tons, a Reuters survey showed. The Malaysian Palm Oil Board is expected to release its October supply and demand data on November 10.

Dalian’s most-active soyoil contract fell 0.74%, while its palm oil contract shed 1.64%. Soyoil prices on the Chicago Board of Trade were down 0.96%.

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

Brent crude futures edged up as investors weighed the future course of the US-Israeli war with Iran after President Donald Trump’s Republican Party suffered heavy losses in midterm elections this week.

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

The ringgit, palm’s currency of trade, strengthened 0.42% against the dollar, making the commodity slightly more expensive for buyers holding foreign currencies.