Palm oil prices fall on expectations of rising supply and a weaker Dalian palm oil

The price of Malaysian palm oil futures fell on Thursday, as the market was impacted by rising production expectations and the weaker Dalian palm oil.

By midday, the benchmark palm oil contract on Bursa Malaysia's Derivatives exchange for January delivery had fallen 4 ringgit (0.1%), or $4120 ($975.38) per metric ton.

Anilkumar bagani, research director of Mumbai-based Sunvin Group and vegetable oil broker Sunvin Group, said that the market was under pressure during Asian trading hours due to concerns about higher production levels and softer Dalian Palm Olein.

He said that there was a danger of Malaysian palm-oil production exceeding 20 million tons in this year. Indonesian palm-oil production had also experienced double-digit growth to date. The crude oil sale and stronger ringgit further pressed palm oil prices.

Trade and Industry officials have said that Malaysia's crude oil palm production will surpass 20 million tonnes for the first-time in 2025. This is due to favourable weather conditions, an improved labour supply and new, higher-yielding plantations.

Eddy Martono, chair of the Indonesia Palm Oil Association, said that Indonesian palm oil production for January-September was over 43 million tons. This represents an increase of 11% annually.

Dalian's soyoil contract with the highest volume of trading rose by 0.31% while palm oil contracts fell 0.14%. Chicago Board of Trade soyoil prices rose 0.3%.

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

After a report showed that crude oil inventories were rising in the U.S., the price of oil continued to decline, continuing the losses from the previous day. This was due to concerns about the current global fuel supply being more than enough.

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 0.12% against the US dollar, increasing the price of the commodity for buyers who hold foreign currencies.

Technical analyst Wang Tao stated that palm oil prices are expected to drop between 3,991 and 4,034 ringgits per ton due to a wave 5.

(source: Reuters)