Palm oil gains 1% as demand and exports offset record stocks

what happened

Malaysian palm oil futures recovered on Monday after losses in the previous session. Reuters reported that firmer Dalian palm olein and robust export figures supported the market. The December FCPOc3 contract on Bursa Malaysia Derivatives settled 46 ringgit higher, or up 1%, at 4,638 ringgit ($1,136.49) per metric ton. It had declined 1.48% in the prior session.

The advance was restrained by expectations of larger supplies. Malaysia’s palm oil inventories reached a record 3.51 million metric tons in September, while output rose for a fourth consecutive month, increasing 16.48% to 2.12 million tons. That exceeded the previous peak recorded in August 2015. Exports fell for a second month, down 12.13% to 1.12 million tons. Cargo surveyors nevertheless put Malaysian palm oil product shipments for October 1-10 between 33.5% and 37.7% above the previous month. In Dalian, the most-active soyoil contract lost 0.3%, while palm oil gained 0.23%; CBOT soyoil rose 0.41%. Oil prices fluctuated as traders weighed possible additional supplies against supply constraints following attacks on Saudi Arabia. The ringgit strengthened 0.05% against the dollar, with $1 equal to 4.0810 ringgit.

why it matters

Record Malaysian inventories point to substantial near-term supply, while export data and firmer competing oils provide support. Crude prices matter because palm oil competes with other feedstocks for biodiesel production.

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