Palm falls for second session on stock fears, weak exports

KUALA LUMPUR: Malaysian palm oil futures fell for a second consecutive trading day on Thursday, July 21, 2023, as concerns over higher August inventories, limited export demand, and the impact of soft Chicago soyoil prices weighed on the market. The November palm oil contract on the Bursa Malaysia Derivatives Exchange dropped 56 ringgit, or 1.13%, to 4,902 ringgit ($1,213.82) per metric ton.

Anilkumar Bagani, commodity research head at brokerage Sunvin Group, noted that the lack of fresh destination buying and the elevated end-of-August stockpiles hampered gains. Cargo surveyors reported a decline in Malaysian palm oil exports in August, ranging from 6.5% to 14.9% compared to the previous month. Malaysia's palm oil inventories are projected to reach a seven-month high in August, due to robust production and a decline in exports, according to a Reuters survey.

Meanwhile, Dalian's top-soyoil contract declined 0.13%, and its palm oil contract slipped 0.44%. Soyoil prices on the Chicago Board of Trade experienced a 1.89% drop. Palm oil's price movements mimic those of other edible oils, as it vies for market share. Oil prices decreased as investors considered the uncertainty surrounding potential military strikes between the U.S. and Iran, which could disrupt Middle East supplies.

Weaker crude oil futures also made palm oil less appealing for biodiesel feedstock. The Malaysian ringgit, palm oil's trading currency, strengthened 0.11% against the dollar, making the commodity marginally more costly for foreign buyers.