Palm prices fall to a five-week low due to rising stock levels and subdued demand
Malaysian palm-oil futures reversed their gains on Tuesday, hitting a low of more than five weeks. This was due to the expectation that the stock would rise and the demand would be subdued as traders awaited a meeting between the US and Chinese presidents.
The benchmark palm-oil contract for December delivery at the Bursa Derivatives Exchange in Malaysia fell 47 ringgit or 0.97% to 4,810 Ringgit ($1,180.66), the lowest closing price since August 14.
Sandeep Singh, director of Kuala Lumpur based consultancy and trading firm The Farm Trade, says that the meeting between US President Donald Trump, and Chinese President Xi Jinping this?week will provide support to the broader agriculture complex, especially soyoil.
El Nino risks will continue to be a major concern until the middle of next summer, he said.
He said that Malaysia's ending stock is expected to be higher than?3million tons, and could possibly approach record levels. The?demand was subdued, and the?spot supply continued to affect prices.
Dalian's palm oil contract, which is the most active contract, fell 0.49% while soyoil prices rose 0.54%. Chicago Board of Trade soyoil prices fell 1.32%.
Palm oil follows the price movement of rival edible oils as it competes to gain a share of global vegetable oils market.
Exports of Malaysian Palm Oil Products for the period September 1-20 fell between 12.8% and 24.7% compared to a month ago, according to cargo surveyors.
Oil prices dropped after reports that Iran said it could reopen Strait of Hormuz in seven days, if the US took initial steps to reduce military pressure. This eased concerns about disruptions of a major global oil shipping route.
Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.
The Malaysian Palm Oil Council stated that the Malaysian Palm Oil Council expects the price of crude palm oil to stay above $1,154 a metric ton through the rest of the year. This is due to weather uncertainty and favorable energy markets.
(source: Reuters)
