KUALA LUMPUR: Malaysian palm oil futures fell on Wednesday, weighed down by ringgit gains and better offers from larger producer Indonesia, as traders await full month output estimates.
The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange slid 31 ringgit, or 0.80% to 3,866 ringgit ($831.49) at closing, its lowest closing level since Nov. 10. A major reason behind the decline in prices was the aggressive offers from neighbouring Indonesia, the world’s biggest palm oil producer and exporter, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
“The ringgit is also somewhat strengthening, putting pressure to the already fragile exports.” Fresh demand from key buyer India was seen easing, while there was some routine buying witnessed in China due to cheap prices, said Anilkumar Bagani, research head at Sunvin Group, a Mumbai-based vegetable oil brokerage.
“The market is now waiting for full month Malaysian palm oil export and production estimates.” The ringgit rose 0.44% against the dollar, making the commodity more expensive for buyers holding foreign currency.
In related oils, Dalian’s most-active soyoil contract was down 0.63%, while its palm oil contract fell 2.11%. Soyoil prices on the Chicago Board of Trade were down 0.62%. Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Oil edged higher on Wednesday as investors turned cautious ahead of a crucial OPEC+ meeting on Thursday to decide output policy in the coming months, while a supply disruption caused by a storm in the Black Sea provided a lift for prices. Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.