Palm slips for second session as profit-taking weighs

KUALA LUMPUR: Malaysian palm oil futures plummeted for the second consecutive trading day on Wednesday, as savvy investors opted to lock in profits. Despite worries that the El Nino weather pattern could negatively affect output, the market held its ground. The benchmark palm oil contract for November delivery on Bursa Malaysia Derivatives Exchange dropped 9 ringgit, or 0.18%, to 4,967 ringgit ($1,220.99) per metric ton at market close.

Analyst Paramalingam Supramaniam, from brokerage firm Pelindung Bestari, noted that the market is still susceptible to occasional profit-taking, but the overall outlook remains positive. This bullish trend is attributed to the El Nino phenomenon and expectations of scarce rainfall, which could impact palm oil production. However, traders are eagerly awaiting the Malaysian Palm Oil Board (MPOB) to release its August supply and demand data.

This information, set to be unveiled on Thursday, will provide further clarity on the market's trajectory. Meanwhile, benchmark Brent crude oil futures breached the $100 per barrel mark, marking a six-week high and crossing a psychological threshold for the first time since July 24. Heightened tensions in the Middle East have heightened fears about potential disruptions to oil supplies from the region.

As palm oil serves as a preferred feedstock for biodiesel production, the surge in crude oil prices has made it an increasingly attractive option. In contrast, Dalian's most-traded soyoil contract slipped 0.73%, while its palm oil contract declined by 1.09%. Soyoil prices on the Chicago Board of Trade notched a 0.35% increase. Palm oil price movements mirror those of other edible oils, as it vies for a larger slice of the global vegetable oil market.

The Malaysian ringgit, which serves as the commodity's trading currency, slipped 0.27% against the US dollar, making palm oil marginally less expensive for buyers using foreign currencies. Indonesia consumed 10.7 million kilolitres of biodiesel derived from palm oil between January and early September, after the government implemented the B50 blend nationwide, as reported in a presentation by the Energy Ministry at a parliamentary hearing.