Palm oil closes at its lowest level in six months amid concerns about rising stocks and weaker competitor oils

Malaysian palm oil futures fell on Tuesday for the third straight session, due to weaker competitor oils and worries about rising stocks in light of softer exports.

The benchmark March palm oil contract on Bursa Derivatives Exchange fell 52 ringgit or 1.3% to $3,961 ringgit (US$969.88) per metric ton. This was its lowest closing rate since June 13.

Anilkumar bagani, the commodity research director at Sunvin Group in Mumbai, said that crude palm oil futures had been trading lower due to the overall weakness of?the global market for vegetable oils.

Bagani said that the persistently lower Malaysian palm-oil export performance raised the possibility of further increases in stocks. The stronger ringgit also adds to the market pressure. Dalian's palm oil contract lost 0.97%, while the most active soyoil contract fell 0.83%. Chicago Board of Trade soyoil prices were down by 0.99%.

Palm oil follows the price changes of other edible oils as it competes to gain a share in the global vegetable oil market. Exports of Malaysian palm oils products fell between 15,9% and 16,4% in the month preceding December 1, according to cargo surveyors. The ringgit (the currency used to trade palm oil) strengthened by 0.15% in relation to the dollar. This made the commodity more costly for buyers who hold foreign currencies.

The oil prices dropped, adding to previous sessions' losses, as prospects of a Russia-Ukraine deal seemed to?strengthen, raising expectations of an eventual easing of sanctions.

Palm oil is less appealing as a biodiesel feedstock due to weaker crude oil futures.

The Solvent Extractors' Association of India reported that India's palm-oil imports increased in November, as refiners took the opportunity to take advantage of lower prices. They increased purchases of tropical oil and reduced imports of more expensive soyoil or sunflower oil.

(source: Reuters)