Palm Oil Swings on Biofuel Demand Outlook and Output Concerns

Palm oil fluctuated on its poor production outlook and concerns about the tropical oil’s biofuel appeal following recent declines in petroleum prices.

Crude oil dropped 3.7% in the previous session, before partially recovering on Wednesday. The commodity, which has slipped in nine out of 12 sessions, traded below $70 a barrel for the first time in more than two years on concerns about global demand.

Palm oil is reacting to moves in crude oil, said David Ng, a senior trader at IcebergX Sdn. Still, concerns about the pace of production in Malaysia are likely to support the market, he said.

Output in the world’s second-biggest grower rose less than 3% in August from a month earlier, the Malaysian Palm Oil Board’s data showed Tuesday. That compared with a surge of 14% in July.

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Tags: Outlook, Production, palm oil, biofuel, demand, petroleum, prices