Palm oil falls on weaker Dalian oils, profit taking

Malaysian palm oil futures declined on Wednesday after experiencing two consecutive days of gains, mirroring weaker Dalian vegetable oils and profit-taking as the narrower discount to soyoil impacted the market. The October delivery benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange dropped 51 ringgit, or 1.07%, to 4,697 ringgit ($1,150.38) per metric ton at market close.

Analyst Anilkumar Bagani of Sunvin Group noted that CPO futures traded lower as traders cashed in on earlier gains, taking advantage of soyoil's relatively tighter spread against palm oil. Dalian's high-volume soyoil contract dropped 0.21%, while its palm oil contract experienced a 0.71% decline. Soyoil prices on the Chicago Board of Trade were down 0.04%.

Palm oil aligns with price movements of other edible oils, as they vie for a share of the global vegetable oils market. Malaysia has reduced its September crude palm oil reference price to maintain export duty at 10%, according to a circular on the Malaysian Palm Oil Board website. SD Guthrie, a major Malaysian palm oil producer, anticipates production disruptions in 2027 and 2028 due to El Niño-induced drier and hotter weather.

While crude oil prices surged on Wednesday due to attacks on two ships and Middle East supply concerns, swelling U.S. crude inventories might temper bullish sentiment. A stronger crude oil market positions palm as a more appealing biodiesel feedstock. As palm's currency, the ringgit, strengthened by 0.17% against the dollar, the commodity became slightly pricier for foreign currency holders.