Malaysian palm oil price falls to 2-month low on inventories outlook
20.09.2018 (The Star Online) - KUALA LUMPUR: Malaysian palm oil futures hit their lowest in nearly two months on Wednesday, tracking declines in related edible oils and as traders expect higher stockpiles in producer nations.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange was down 1.8 percent at 2,158 ringgit ($520.83) a tonne at the close of trade for a third consecutive day of losses.
The contract had earlier declined by as much as 1.9 percent to 2,156 ringgit, its lowest since July 25.
Trading volumes stood at 51,880 lots of 25 tonnes each at the close.
"Market sentiment was weakened by the overseas drop and also anticipation of a build-up in stocks," said a one Kuala Lumpur-based futures trader said, referring to other edible oils on the U.S. Chicago Board of Trade and Dalian Commodity Exchange.
Stocks are expected to climb further, she said, with production growth seen outpacing gains.
Palm oil end-stocks in Malaysia climbed to a seven-month high in August as production levels increased and exports dropped, an industry regulator's data showed last week.
Another trader added that market sentiment was also dented by the "China-U.S. problem", referencing the deepening trade dispute between the two countries.
The Chicago September soybean oil contract fell more than 1 percent on Tuesday, weighed down by the trade war between China and the United States and a record U.S. crop. It was last down 0.5 percent on Wednesday.
Meanwhile, the January soybean oil contract on the Dalian Commodity Exchange dropped 1.2 percent and the Dalian January palm oil contract fell by 1.7 percent.
Palm oil prices are affected by movements of other edible oils that compete in the global vegetable oils market.
Palm oil could fall into a range of 2,162 ringgit-2,178 ringgit a tonne, having broken a support at 2,202 ringgit, said Wang Tao, a Reuters market analyst for commodities and energy technicals. - Reuters