Key Takeaways
- Malaysian palm oil futures closed lower due to rising stockpile concerns.
- Expectations of high September inventories capped gains, with production outpacing exports.
- Weaker crude oil prices also affected palm oil, making it less attractive for biodiesel feedstock.
Malaysian palm oil futures closed lower on Tuesday, with the benchmark contract for December delivery on the Bursa Malaysia Derivatives Exchange dropping 18 ringgit, or 0.39%, to 4,560 ringgit ($1,117.10) a metric ton.
The decline was driven by concerns over rising September stockpiles, as production soared to record volumes, outpacing sluggish export demand, according to a Reuters survey.
David Ng, a proprietary trader at Kuala Lumpur-based trading firm Iceberg X Sdn Bhd, noted that expectations of high September inventories continued to cap gains.
Crude oil prices also fell by over 2%, as rising Middle Eastern exports and a G7 emergency diesel and crude stockpile release eased supply concerns, though security risks in the region limited further losses.
The Dalian Commodity Exchange was closed for a public holiday and will reopen on October 8, meaning that traders had no immediate updates on Chinese palm oil prices.
Palm oil prices track those of rival edible oils, as it competes for a share of the global vegetable oils market. The ringgit, the currency of trade for palm oil, strengthened 0.07% against the dollar, making the commodity slightly more expensive for buyers holding foreign currencies.
Indian sunflower oil imports fell in September to their lowest level in more than four years after the Ukraine war disrupted shipments, leading refiners to increase palm oil purchases to their highest level in seven months, according to five dealers.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange shed 18 ringgit, or 0.39%, to 4,560 ringgit ($1,117.10) a metric ton at the close, reflecting the market's response to rising stockpile concerns and weaker crude oil prices.
