Palm oil continues to decline on profit-taking

Malaysian palm oil futures declined for a second consecutive session on September 9 as traders took profits. The November contract on Bursa Malaysia fell by 9 ringgit, or 0.18%, to 4,967 ringgit/t ($1,221/t).

However, the broader market trend remains bullish due to concerns over the impact of El Niño and expectations of lower rainfall, which could negatively affect palm oil production. Market participants are also awaiting Malaysian Palm Oil Board data on August production, exports and stocks.

Palm oil is receiving support from higher crude oil prices. Brent futures climbed above $100 per barrel to a more than six-week high amid escalating tensions in the Middle East. Higher crude oil prices make palm oil more competitive as a biodiesel feedstock.

Other vegetable oil markets showed mixed dynamics. The most-active soyoil contract in Dalian fell by 0.73%, while palm oil declined by 1.09%. Meanwhile, Chicago soyoil futures gained 0.35%.

Strong biodiesel demand in Indonesia also remains a supportive factor. From the beginning of the year through early September, the country used 10.7 mln kilolitres of palm oil-based biodiesel amid the nationwide rollout of the B50 blend.

Tags: Malaysia, palm oil, futures, prices