Palm oil prices remain stable amid production risks

Malaysian palm oil futures ended almost unchanged on September 8, as weather-related production risks and stronger soyoil prices supported the market. The benchmark November contract on Bursa Malaysia fell just 0.02% to 4,977 ringgit ($1,226.77) per ton.

Market participants continue to assess the potential impact of El Niño on palm oil production. Prices are also supported by gains in competing vegetable oils. Dalian’s most-active soyoil contract rose 0.51%, while palm oil gained 1.37%. Chicago soyoil futures increased by 0.82%.

Higher crude oil prices, which reached multi-week highs amid escalating tensions in the Middle East, provided additional support. Stronger crude oil prices make palm oil more competitive as a biodiesel feedstock and could support demand from the fuel sector.

Meanwhile, the Malaysian ringgit weakened 0.32% against the US dollar, making palm oil slightly cheaper for buyers using other currencies. Traders are awaiting new Malaysian Palm Oil Board (MPOB) data on August production, stocks and demand, due to be released this week.

Attention in the physical market is also focused on India, where aggressive vegetable oil buying has caused congestion at major ports. With shore tanks filling up and large volumes of cargo arriving, vessel unloading has been delayed by up to 10 days, potentially affecting the pace of further purchases by the world’s largest vegetable oil importer.

Tags: prices, Malaysia, palm oil, futures