Palmetto set to decline for fifth week on weak November demand and elevated stocks

Malaysian palm futures fell on Friday. The market is now poised to experience a fifth consecutive weekly decline due to the weak demand for palm oil in November. A stronger ringgit, along with the expectation of higher inventories, are all contributing factors.

By midday, the benchmark contract for palm oil delivery in January on the Bursa Derivatives exchange had lost 22 ringgit or 0.53% to 4,103 Ringgit ($971.35) per metric ton. The contract has lost 0.15% this week.

The market is under pressure due to the combination of a stronger ringgit and lower November demand. Meanwhile, the high-end stock prices are making it difficult to determine a bottom.

Malaysian production will surpass 20 million tonnes for the first-time in 2025. The record output could mean that it ends the year with more than expected stocks.

The palm oil stock in Malaysia had increased for the eighth month in a row to reach a 6-1/2 year high at the end of October. This was due to the highest production in the last decade, which outweighed an increase in exports.

Exports of palm oil products from Malaysia for the period November 1-10 were estimated to have fallen between 9.5% and 12,3% compared with a similar period one month earlier.

Dalian's palm oil contract, which is the most active contract, fell 0.8%. Chicago Board of Trade soyoil prices were up by 0.44%.

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

A leading industry group said that India's palm-oil imports fell to their lowest level for five years in the 2024/25 year. Meanwhile, soyoil purchases soared to record levels as palm oil became less appealing to buyers due to an increasing price premium.

The price of oil rose by more than 2% following a drone attack in Ukraine that damaged an oil depot at the Russian Black Sea Port of Novorossiysk.

Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.

The palm's trade currency, the ringgit (the palm's currency), has weakened by 0.1% in relation to the dollar. This makes the commodity slightly more affordable for buyers who hold foreign currencies.

Technical analyst Wang Tao stated that palm oil was likely to retest the resistance level of 4,145 ringgits per ton. A break above this could lead to gains in the range 4,171-42,213 ringgits.

(source: Reuters)