Palm oil falls to near 12-week low on weak rivals; heads for second monthly drop

Malaysian palm oil futures tumbled for a fourth consecutive session on Wednesday and were poised to book a second monthly drop, weighed down by weakness in rival edible oils in Dalian and Chicago commodity exchanges and a strong ringgit.

The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange lost RM49, or 1.14 per cent, to RM4,268 (US$1,010.42)a metric ton, as of 0235 GMT.

The contract hit its lowest since August 7 earlier in the session.

Dalian’s most-active soyoil contract was down 1.29 per cent, while its palm oil contract fell 2.02 per cent. Soyoil prices on the Chicago Board of Trade lost 0.3 per cent.

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

Indonesia’s palm oil stocks dropped slightly in August to 2.54 million metric tons, 1 per cent lower than a month earlier, with falling output offsetting a decline in exports, Indonesia’s palm oil association GAPKI said on Tuesday.

Oil prices edged up on Wednesday morning after three straight days of declines, with market sources citing a decline in US crude inventories, while investor concerns about Russia sanctions and a potential OPEC+ output increase capped gains.

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

The ringgit, palm’s currency of trade, strengthened 0.12 per cent against the dollar. A stronger ringgit makes palm oil more expensive for buyers holding foreign currencies.

Palm oil FCPOc3 is expected to stabilise around support at RM4,269 per metric ton and bounce, said Reuters technical analyst Wang Tao.

Asian shares got a lift from Wall Street on Wednesday thanks to a fresh wave of optimism over artificial intelligence, as investors braced for a busy day headlined by the Federal Reserve’s decision and earnings from technology heavyweights.

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