Palm oil slips as Malaysia’s stocks are expected to hit a record

Malaysian palm oil futures fell on October 6 under pressure from expectations of sharply higher inventories and weaker crude oil prices. The benchmark December contract on Bursa Malaysia Derivatives lost 18 ringgit, or 0.39%, to 4,560 ringgit/t, equivalent to around $1,117/t.

The market expects Malaysia’s palm oil stocks to reach an all-time high in September and surpass the previous record set in December 2018. The build-up is being driven by record production outpacing sluggish export demand.

Further pressure came from crude oil prices, which fell by more than 2%. Rising Middle Eastern exports and a G7 release of emergency diesel and crude oil reserves eased supply concerns. Lower crude prices also make palm oil less attractive as a biodiesel feedstock.

Soyoil prices on the CBOT also declined, falling 0.58%. Meanwhile, the ringgit strengthened by 0.07% against the US dollar, making Malaysian palm oil slightly more expensive for buyers using other currencies.

At the same time, Indian demand for palm oil strengthened. India’s sunflower oil imports fell in September to their lowest level in more than four years due to disruptions in supplies from Ukraine, prompting refiners to raise palm oil purchases to a seven-month high.

Tags: prices, Malaysia, palm oil, palm futures