Palm oil prices fall amid concerns about rising production and stocks

Malaysian palm futures declined on Monday due to concerns about the increasing stock and production levels. Prices were also pressured by the weaker Dalian edible oil.

At midday, the benchmark palm oil contract on Bursa Derivatives exchange for October delivery fell 70 ringgit or 1.65% to 4,175 Ringgit ($986.07) per metric ton. The contract increased by 0.35% Friday.

David Ng, a proprietary trading at Kuala Lumpur's Iceberg X Sdn. Bhd., said that crude palm oil prices fell amid increasing stocks and production in the country.

The negative mood was also fueled by the lower Dalian prices in Asian hours. He said that he saw support at 4,180 and resistance at 4300 ringgit.

On August 11, the Malaysian Palm Oil Board will release its monthly data on supply and demand. Later in the day, a poll survey will be released on palm production and exports.

Dalian's soyoil contract with the highest volume of trade rose by 0.34% while palm oil contracts fell by 0.85%. The Chicago Board of Trade's (CBOT), soyoil price rose by 0.45%.

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

Oil prices continued to fall after OPEC+ agreed on another large production increase in September. Concerns about a slowing U.S. economy, the world's largest oil consumer, added to the pressure.

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

The palm's trade currency, the ringgit, has strengthened by 0.96% in relation to the dollar. This makes it more expensive for foreign buyers.

The top palm oil exporters are also suffering from the effects of old trees and aged farmers.

Technical analyst Wang Tao stated that palm oil is neutral between 4,211-42,273 ringgit/metric ton, and an escape from this range could indicate a direction. ($1 = 4.2340 ringgit)

(source: Reuters)