Palm set to fall for the fourth consecutive week on swelling stock, soft crude

Malaysian palm futures fell for the fourth consecutive week on Friday amid expectations that October end stocks would be higher and a recent drop in crude oil price.

By midday, the benchmark palm oil contract on Bursa Derivatives Exchange for January delivery had fallen 39 ringgit or 0.94% to 4,110 Ringgit ($973.01), a metric tonne.

The contract is down 2.31% for the week.

Sandeep Singh is the director of The Farm Trade in Kuala Lumpur, a consulting and trading company. He said that palm oil was under pressure because of expectations for higher end stocks and lower crude oil.

Singh said that with palm oil at a discount to soyoil, and technical chart support of 4,080 Ringgit, this level is likely to be a good place for some buying.

Malaysian palm oil inventories are likely to have reached a new high of two years in October as production reached its highest level in seven year, surpassing the export demand.

Stockpiles will have increased 3.5% in the last month, to 2,44 million metric tonnes. This is the highest level since October 2023.

On November 10, the Malaysian Palm Oil Board is expected to release their monthly data.

After three days of declining prices, crude oil rose on Friday on concerns about an excess supply in the United States and a slowing demand. Prices were on track for a second consecutive weekly loss.

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

Dalian's palm oil contract, which is the most active contract, lost 0.21%. Chicago Board of Trade Soyoil Prices fell 0.34%.

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

Technical analyst Wang Tao said that palm oil was expected to test the support level of 4,124 ringgits per ton. A break below this could trigger a fall into a range between 4,080 and 4,107 ringgits.

(source: Reuters)