Palm oil falls following weaker rival vegetable oils and crude oil

Malaysian palm oil futures closed lower on Friday, tracking weaker rival vegetable oils in China and the US, as well as falling crude oil prices. The December contract on Bursa Malaysia declined 0.77% to 4,898 ringgit/t, or around $1,200/t.

Despite the daily decline, palm oil gained 1.74% over the week. Friday’s pressure was reinforced by a 1.57% drop in Dalian soybean oil, a 2.14% decline in Dalian palm oil and a 0.77% fall in CBOT soybean oil.

Crude oil prices also fell by around 2%, adding pressure to the market. Lower crude oil prices reduce palm oil’s attractiveness as a feedstock for biodiesel production.

The market is also watching for a possible decision by India to cut import duties on vegetable oils, which could affect demand for Malaysian palm oil. At the same time, the ringgit strengthened 0.49% against the US dollar, making palm oil more expensive for foreign buyers.

Support could come from an expected decline in output in Indonesia’s Kalimantan region. Analysts estimate palm oil production there could fall by 12–15% in the fourth quarter due to prolonged dry weather and widespread fires.

Tags: prices, Malaysia, palm oil