Palm closes at lowest level in 7 months due to higher production and stock levels
Malaysian palm futures continued to fall for the third session in a row on Wednesday, as market sentiment was still weighed down by concerns about higher production levels and increased inventories.
The benchmark contract for palm oil delivery in July on Bursa Derivatives Exchange fell by 33 ringgit or 0.84% to 3,910 Ringgit ($906.77) per metric ton, the lowest price it has closed at since September 20 of last year.
David Ng is a proprietary trader with Kuala Lumpur's Iceberg X Sdn Bhd. He said that the weakness in the market was primarily due to production concerns and an expectation of higher stocks levels in the coming week.
Palm oil stocks are likely to have risen for the first six-month period in March according to a poll, while production has soared by 10.3% compared with the previous month.
Dalian's palm oil contract, which is the most active contract, fell 0.17% while soyoil prices rose 0.18%. Chicago Board of Trade soyoil prices were down by 0.43%.
As palm oil competes to gain a share in the global vegetable oil market, it tracks the price movements of competing edible oils.
The global trade war has weakened the outlook for fuel consumption, and concerns about the mounting supply have also been a factor.
Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.
Palm's trade currency, the ringgit, has strengthened by 0.3% in relation to the U.S. Dollar, increasing the price of the commodity for buyers with foreign currencies.
Exports in April rose by between 3.6% to 5.1%, according to cargo surveyors.
A trade regulation revealed that Indonesia has lowered the crude palm oil price reference to $924.46 a ton in May.
Data from the European Commission revealed that the imports of soybeans by the European Union in 2024/25, which began in July, had reached 11,46 million tonnes by April 27. This was an increase of 8% compared to a year ago, while imports palm oil were down by 19%. ($1 = 4.3120 ringgit)
(source: Reuters)
