Palm extends losses on weaker rival oils, higher stockpile expectations

Malaysian palm oil futures opened lower on Thursday, extending losses to a second session on weaker rival edible oils and expectations of rising stocks.

The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange slid 38 ringgit, or 0.92 per cent, to 4,115 ringgit (US$1,000.00) a metric ton in early trade.

Dalian’s most-active soyoil contract fell 0.56 per cent, while its palm oil contract shed 0.55 per cent. Soyoil prices on the Chicago Board of Trade were down 0.08 per cent.

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

Malaysia’s palm oil inventories likely rose to a more than six-and-a-half-year high in November, as exports slumped amid record production for the month, a Reuters survey showed.

Oil prices moved slightly higher after Ukrainian attacks on Russia’s oil infrastructure signalled potential supply constraints, and stalled peace talks tempered expectations of a deal restoring Russian oil flows to global markets, though weak fundamentals kept gains limited.

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

The ringgit, palm’s currency of trade, strengthened 0.15 per cent against the dollar, making the commodity slightly expensive for buyers holding foreign currencies.

Shipments of US crops to China are accelerating after a tense tariff war had stalled trade for months, with at least six bulk cargo vessels scheduled to load with soybeans at Gulf Coast terminals through mid-December, according to a shipping schedule seen by Reuters.

Palm oil may test support at 4,121 ringgit per ton, following its failure to break resistance at 4,202 ringgit, Reuters technical analyst Wang Tao said.

The dollar hit a five-week low while Asian stocks made a lacklustre start to the trading session on Thursday, after weaker-than-expected economic data cemented expectations the Federal Reserve will cut interest rates at its meeting next week.

Tags: Malaysia, palm oil, futures, benchmark contract, soyoil