Palm oil prices fall on weak exports and expected rise in Malaysian stocks

Malaysian palm oil futures declined for a second consecutive session on September 3, pressured by weak export demand and expectations of rising inventories. The November contract on Bursa Malaysia fell 1.13% to MYR 4,902 ($1,214) per ton.

According to cargo surveyors, Malaysian palm oil exports declined by 6.5–14.9% in August compared with July. Meanwhile, the country’s inventories are expected to climb to a seven-month high as weaker exports coincide with the strongest production in nine months.

Additional pressure came from falling prices of competing vegetable oils. Chicago soybean oil futures dropped 1.89%, while on China’s Dalian exchange soybean oil declined 0.13% and palm oil lost 0.44%. Palm oil typically tracks movements in rival vegetable oils as they compete for a share of the global market.

Crude oil prices also edged lower amid uncertainty surrounding developments in the Middle East. Lower crude prices make palm oil less competitive as a biodiesel feedstock, adding further pressure to the market.

The Malaysian ringgit’s 0.11% appreciation against the US dollar also weighed on exports by making palm oil more expensive for foreign buyers. Further market direction will largely depend on actual August inventory data and a potential recovery in demand from major importers.

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