Malaysian palm oil rises on strong export demand

Malaysian palm oil futures rose 1% on October 12, recovering part of the previous session’s losses. The December contract on Bursa Malaysia gained 46 ringgit to 4,638 ringgit/t ($1,136.49/t), supported by firmer Dalian palm olein prices and strong export demand.

Cargo surveyors estimated that exports of Malaysian palm oil and palm oil products during October 1–10 increased by 33.5–37.7% compared with the same period a month earlier. Stronger overseas demand was one of the key drivers behind the rebound in prices.

However, record-high inventories continued to limit further gains. Malaysia’s palm oil stocks rose to 3.51 mln tons in September after production jumped 16.48% to a record 2.12 mln tons. Output increased for a fourth consecutive month and surpassed the previous record set in August 2015.

Exports, meanwhile, declined for a second straight month in September, falling 12.13% to 1.12 mln tons and contributing to the buildup in inventories. Market participants said the high level of end-stocks remains the main factor capping further upside in palm oil prices.

The market also received support from other vegetable oils and crude oil. Dalian palm oil gained 0.23%, while Chicago soyoil rose 0.41%. At the same time, the Malaysian ringgit strengthened by 0.05%, making palm oil slightly more expensive for buyers using other currencies.

Tags: prices, Malaysia, palm oil