Palm oil extends declines on weak demand concerns

Malaysian palm oil futures fell for a second straight session on Thursday, as sluggish demand pressured prices.

The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange slid 85 ringgit, or 1.95%, to 4,269 ringgit ($949.51) a metric ton at the midday break.

The contract lost 0.25% on Wednesday.

Traders are awaiting signs of market recovery after the recent rout, however, demand remains weak and continues to put pressure on prices, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.

“Authorities in Indonesia have also been looking into ways to curb used cooking oil exports, but the extent of the tightening is not immediately clear.”

Indonesia has curbed exports of used cooking oil and palm oil residue to ensure supply to domestic cooking oil and biodiesel industries, the government said on Wednesday.

Cargo surveyors are scheduled to release Jan. 1-10 export data, and the Malaysia Palm Oil Board will release its December supply-demand data, both on Friday.

Dalian’s most-active soyoil contract fell 1.03%, while its palm oil contract lost 2.79%.

Soyoil prices on the Chicago Board of Trade were down 1.15%.

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

Oil prices declined for a second day after large builds in fuel inventories in top user, the US, though expectations for increasing winter fuel demand and tighter supply concerns limited losses.

Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.

The ringgit, palm’s currency of trade, strengthened 0.09% against the dollar, making the commodity more expensive for foreign currency holders.

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