MUMBAI: Malaysian palm oil futures fell on Tuesday to their lowest in 3-1/2 months on fears of an inventory build-up, while industry officials forecast production grew more than exports last month.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange fell 38 ringgit, or 1.05%, to 3,567 ringgit ($753.64) per metric ton by the midday break.
Earlier in the session, it fell to the lowest level since June 23 at 3,520 ringgit.
Palm edges up as crude oil rally fuels biodiesel demand hopes
Malaysia’s palm oil stocks at the end of September rose 9.6% from the previous month to 2.31 million tons, data from the Malaysian Palm Oil Board (MPOB) showed after the market was closed for the midday break.
Crude palm oil production gained 4.33% from August to 1.83 million tons in September, while palm oil exports dropped to 1.2 million tons, MPOB said.
“Despite the threat of El Nino, demand is really taking a backseat. India has sufficient stocks, and rival oils are also exerting pressure on palm oil,” said Mitesh Saiya, trading manager at Mumbai-based firm Kantilal Laxmichand & Co.
Soyoil futures on the Chicago Board of Trade were down 0.91% by 0449 GMT.
India’s palm oil imports in September dropped 26% from a month earlier after inventories jumped to record levels.
Oil prices edged down on Tuesday after gaining more than 4% in the previous session, as markets weighed the potential for supply disruptions from the Middle East conflict.
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
Analysts polled by Reuters expect the U.S. Department of Agriculture in a report due on Oct. 12 to slightly downgrade its estimates for the U.S. corn and soy harvests.
Source: Brecorder
