VEGOILS - Palm closes 1% lower due to market caution and stock accumulation

Malaysian palm futures fell for the second session in a row on Monday due to a cautious investor mood and an expectation of increasing inventories, as increased production pressured market.

At the close, the benchmark palm oil contract on Bursa Malaysia's Derivatives exchange for December delivery fell 48 ringgit or 1.06% to 4,496 Ringgit ($1,064.14) per metric ton.

David Ng is a proprietary trader with Kuala Lumpur's trading firm Iceberg X Sdn. Bhd. He said that the lower prices of crude palm oil were due to the market's risk-off attitude and expectation of higher stock levels in coming weeks, amid increased production.

Dalian's palm oil contract, which is the most active contract, fell by 1.31%. Chicago Board of Trade soyoil prices were up 0.3%.

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

Oil prices increased after the previous session when they hit a five-month low. Investors focused on the potential for talks between Presidents of China and the United States that could ease tensions in trade between the two world's largest economies.

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

The palm ringgit MYR= currency has weakened by 0.07% in relation to the dollar. This makes the commodity slightly more affordable for buyers who hold foreign currencies.

Exports of Malaysian Palm Oil Products for October 1-10 increased between 9.9% to 19.4% in comparison with the same period one month earlier.

Due to increased global production, the Malaysian government expects that crude palm oil prices will range between 3,900 Ringgit ($925.05), and 4,100 Ringgit ($4,100.05), per metric ton in 2019.

(source: Reuters)