Palm oil is lagging behind rival Dalian oil; increased production also weighs

Malaysian palm futures continued to lose money on Monday due to the weakness of rival edible oils traded on Dalian's exchange. Meanwhile, increased production continues pressure on prices.

By midday, the benchmark palm oil contract on Bursa Derivatives Exchange for January delivery had fallen 61 ringgit or 1.45% to 4,146 Ringgit ($981.53) per metric ton.

The Dalian market was weak, which weighed on futures. A rise in production has also continued to put pressure on prices. We also see a good increase in demand, which will lead to a better export in November and Decembre," said Paramalingam Supramaniam at Selangor brokerage Pelindung Bestari.

Dalian's palm oil contract, which is the most active contract, lost 1.5% while soyoil prices dropped 0.74%. The Chicago Board of Trade's (CBOT), which trades soyoil, saw a gain of 0.49%.

As palm oil competes to gain a share in the global vegetable oils industry, it tracks the price fluctuations of competing edible oils.

AmSpec Agri Malaysia, an independent inspection company, reported that exports of palm oil products from Malaysia rose by 4.3% in October compared to the previous month. Intertek Testing Services, a cargo surveyor, said they had increased by 5.2%.

The Statistics Bureau reported that Indonesia exported 17.58 millions tons of crude palm oil and refined palm oils in the period January to September, an increase of 11.62% compared with the same period the previous year.

The oil prices rose on Monday, after OPEC+ decided not to increase production in the first quarter next year. This eased fears about a glut of supply, but weak factory figures in Asia capped gains.

Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.

Palm oil is more appealing to foreign currency buyers because the ringgit (the palm's trade currency) has weakened by 0.24% compared to the dollar.

U.S. soy futures reached a 15-month peak on Friday. They posted their largest monthly gain in nearly five years, on the hope of increased Chinese purchases, traders said.

According to a projection and a falling trend, the price of palm oil FCPOc3 will likely fall between 4,106-41,145 ringgits per metric tonne, according to technical analyst Wang Tao.

(source: Reuters)