Palm prices slip on uncertainty about demand and high stocks

Malaysian palm futures declined for a forth consecutive session on Wednesday, due to concerns about subdued consumer demand and large inventories. Meanwhile, mounting U.S. - China trade tensions dampened sentiment.

By midday, the benchmark palm oil contract on Bursa Malaysia's Derivatives exchange for January delivery had fallen 8 ringgit or 0.18% to 4,488 Ringgit ($1,062.75) per metric ton.

Paramalingam Supramaniam is the director of Selangor brokerage Pelindung Bestari. He said that buyers are waiting for prices to drop before buying.

The market is vulnerable to selling pressure, Supramaniam said. "End stocks are still high and there's a risk that the truce between China and the United States could collapse."

In September, Malaysian palm oil inventories rose to near two-year levels.

Last week, the industry regulator revealed that it was a regulated sector.

Dalian's palm oil contract, which is the most active contract, fell by 0.62%. Chicago Board of Trade soyoil prices were up by 0.47%.

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

Crude oil prices dropped in the early trading session, continuing losses from the previous day, as investors considered the warning by the International Energy Agency of a surplus supply in 2026, and the U.S. China trade tensions which could harm demand.

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

The palm ringgit's trade currency strengthened by 0.17% versus the dollar. This made the commodity a little more expensive for foreign currency buyers.

Indonesia's energy minister has said that it may restrict the export of crude palm oil in order to ensure that there is sufficient supply domestically to produce biodiesel.

Malaysia has reduced its crude palm oil price reference for November to a level which maintains export duties at 10%.

Technical analyst Wang Tao stated that palm oil could fall to 4,401 Ringgit per ton as it has lost support at 4,484 Ringgit.

(source: Reuters)