Key Takeaways
- Malaysian palm oil futures fell over 1% on Thursday.
- Weak September exports and expectations of rising inventories contributed to the decline.
- Rival vegetable oils, particularly soy oil, also saw losses.
Malaysian palm oil futures fell more than 1% on Thursday, retreating from a 21-month high. The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange closed at 4,940 ringgit ($1,206.05) a metric ton, down 58 ringgit or 1.16%.
The decline was driven by expectations of rising September inventories, sluggish exports, and weakness in rival vegetable oils. Dalian’s most-active soyoil contract fell 0.34%, while its palm oil contract lost 1.06%. Soyoil prices on the Chicago Board of Trade were down 1.02%.
Paramalingam Supramaniam, a director at Selangor-based brokerage Pelindung Bestari, stated that 'Palm oil fundamentals remain weighed down by weak September exports and expectations that end-month stocks could rise to around 3 million tons.'
The market received some support from speculation that India may cut import duties on vegetable oils and that Indonesia could raise its biodiesel blending mandate. However, cargo surveyors estimated that exports of Malaysian palm oil products for September 1-15 fell between 17.8% and 25.6% from a month earlier.
In Indonesia, palm oil output in the major producing region of Kalimantan could fall by 12% to 15% in the fourth quarter due to prolonged dry weather and widespread fires. The ringgit, the currency of trade for palm oil, weakened 0.33% against the US dollar, making the commodity cheaper for buyers holding foreign currencies.
Oil prices eased on Thursday, extending losses as reports of additional Saudi crude cargoes through Oman eased supply concerns. However, prices remained above $100 a barrel on fears of a widening Middle East conflict, making palm oil a less attractive option for biodiesel feedstock.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange was down 58 ringgit, or 1.16%, at 4,940 ringgit ($1,206.05) a metric ton at the close. Earlier in the day, the contract hit its highest since December 2024.
The market drew some support from speculation that India may cut import duties on vegetable oils and that Indonesia could raise its biodiesel blending mandate, but these factors were not enough to prevent the overall decline.
Palm oil fundamentals remain weighed down by weak September exports and expectations that end-month stocks could rise to around 3 million tons.
Paramalingam Supramaniam, Director at Selangor-based brokerage Pelindung Bestari
