BEIJING: Malaysian palm oil futures ended a near six-week low on Tuesday, falling for a third consecutive session, due to weak exports and concerns over growing stockpiles.
The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange was down 42 ringgit, or 1.08%, at 3,856 ringgit ($819.90) a metric ton, its lowest closing since May 16. “Weak exports, low demand from China, and a narrowing spread between palm oil and soy oil is putting pressure on the contract,” said Mitesh Saiya, trading manager at trading firm Kantilal Laxmichand & Co.
Outlook on the contract is pessimistic due to growing concerns over stock levels, he added. Indians bought a record 500,000 tons of sunflower oil for June delivery as competition between leading suppliers Russia and Ukraine made it cheaper than soyoil and palm oil, two leading buyers and a customs official told Reuters.
Exports in June have been weak so far, with cargo surveyors estimating shipments from Malaysia for June 1-25 dropping 16.1% and 16.9% from a month earlier.
Fitch Ratings said it expects the contract to weaken from the second half of the year on higher global vegetable oil supply as better rainfall drives production, especially in larger producer Indonesia. “Spot prices have weakened after exceeding USD950 per ton in early April 2024, and Fitch assumes they will average USD775 per ton in 2024,” it said in a note.
Dalian’s most-active soyoil contract fell 1.2%, while its palm oil contract lost 0.8%. Soyoil prices on the Chicago Board of Trade were down 0.3%. Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market. Brent crude fell on Tuesday while investors awaited US inflation data later this week, but prices held above the $85 level after the previous session’s gains on escalating geopolitical tensions and hopes of improved demand this summer.
Source: Brecorder
