Malaysian palm oil slides over 1% on weak Dalian prices and high stockpiles

what happened

Malaysian palm oil futures lost more than 1% on Tuesday, extending a decline into a second session. Softer Dalian prices and elevated inventories weighed on the market. The January contract on Bursa Malaysia Derivatives dropped by 87 ringgit (1.82%), reaching 4,702 ringgit ($1,151.04) per metric ton at midday.

A Kuala Lumpur-based trader said the market is following moves in Dalian. Dalian soyoil fell 2.4% and its palm contract declined 3.15%, while soyoil on the Chicago Board of Trade (CBOT) slipped 0.34%. In its October note, LSEG Agriculture Research said prices had firmed earlier in the month on El Nino-related production risks and stronger biodiesel demand from Indonesia, but record Malaysian inventories were likely to cap further gains.

Malaysian palm oil stockpiles rose to 3.51 million metric tons in September as production reached an all-time high. Cargo surveyors estimated that Malaysian palm product exports for October 1-25 climbed between 46.9% and 67.7% from a month earlier. The ringgit, the currency used for palm trading, gained 0.02% against the dollar.

why it matters

Palm oil competes with other edible oils, so moves in soyoil feed directly into its pricing. Brent crude eased but stayed near six-month highs after Houthi attacks on Saudi Arabia, and weaker crude makes palm less attractive as biodiesel feedstock. A firmer ringgit also makes the commodity more expensive for buyers holding foreign currencies.

market impact

Palm oil and edible oils: record stocks and weak Dalian prices add pressure on futures

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