Palm oil falls to more than seven-week low

Malaysian palm oil futures fell more than 2% on Friday to their lowest level in over seven weeks. The December contract on Bursa Malaysia dropped 99 ringgit, or 2.07%, to 4,673 ringgit ($1,148.16) per ton, the lowest level since August 3.

Palm oil lost 4.59% over the week after gaining 1.74% a week earlier. The main pressure came from expectations of higher production and weak exports, which could lead to a further build-up of inventories in Malaysia.

Market participants estimate that Malaysian palm oil stocks could exceed 3.1 mln tons by the end of September. Weak demand from India, the world’s largest palm oil importer, is also weighing on the market.

India’s cut in basic import duties on palm, soybean and sunflower oils has so far failed to provide significant support to prices. Lower crude oil prices are also pressuring the market by reducing palm oil’s competitiveness as a biodiesel feedstock.

Additional pressure came from the soybean oil market, with CBOT soyoil futures down 1.13%. Meanwhile, the Malaysian ringgit strengthened by 0.34% against the dollar, making palm oil more expensive for buyers using other currencies.

Tags: Malaysia, palm oil, futures, palm futures, prices