Palm oil drops on stockpiles in Malaysia, reduced edible imports to India
04/05/2023 (Hellenic Shipping News) - Malaysian palm oil futures closed lower on Friday, weighed down by stockpiles in Malaysia and low levels of edible oil imports to India, though falling Chinese demand limited losses.
The benchmark palm oil contract FCPOc3 for January delivery on the Bursa Malaysia Derivatives Exchange fell 4 ringgit, or 0.1%, to 3,779 ringgit ($799.62) a metric ton at closing.
The benchmark contract gained 0.1% this week, recording its fourth consecutive weekly rise.
Malaysia’s palm oil stocks at the end of October were at their highest since May 2019, as higher production overshadowed growing exports, a Reuters survey showed on Friday.
In October, India’s edible oil imports hit a 16-month low as refiners curtailed purchases on rising stock levels, six dealers told Reuters. Top-importer India reducing purchases could increase stockpiles in other key producers.
China’s services activity expanded slightly faster in October, a private-sector survey showed, with sales growing at the softest rate in 10 months.
“Demand from China, which typically participates in forward purchasing, is showing a lack of substantial coverage for December,” said Pranav Bajoria, a director at Singapore-based brokerage Comglobal.
A global vegetable oil supply deficit is likely next year, driven by the impact of El Nino and high demand, leading analyst Thomas Mielke said on Friday.
Indonesian palm oil output is expected to drop by at least one million metric tons next year, while Malaysia’s output is anticipated to remain unchanged, industry analyst Dorab Mistry said on Friday.
Indonesia plans to continue its domestic market obligation (DMO) for palm oil into 2024 to stabilise cooking oil prices, Trade Ministry official Isy Karim said on Thursday.
The policy was imposed last year to control surging prices by allowing exports only after meeting domestic sales.
Dalian’s most-active soyoil contract DBYcv1 rose 1.6%, while its palm oil contract DCPcv1 was up 1.9%. Soyoil prices on the Chicago Board of Trade BOcv1 climbed 0.5%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
The Malaysian ringgit MYR=, palm’s currency of trade, strengthened 0.5% against the dollar. A stronger ringgit makes palm oil less attractive for foreign currency holders.
Source: Reuters