Palm hits two-week low on rising stocks

Malaysian palm oil futures plummeted to their lowest close in two weeks on Friday, as mounting inventories eroded prices, although looming supply shortages kept the fall in check. The key palm oil contract for November delivery on Bursa Malaysia Derivatives Exchange dropped 67 ringgit, or 1.37%, to 4,818 ringgit ($1,184.37) per metric ton, the lowest closing price since August 27.

The contract declined 2.25% this week after a 0.72% gain the previous week. Malaysia's palm oil inventories surged to an eight-month high in August, driven by production reaching its highest level since December and exports contracting, according to industry regulator data released on Thursday. The significant inventory growth signals a widening gap between recovering seasonal output and reduced export demand, as reported by CIMB Securities research.

"The higher stock level could limit near-term crude palm oil price gains, though downside may still be buffered if biological tree stress continues to dampen production growth," the report noted. It highlighted that production is likely to stay robust seasonally, but a substantial export revival will be crucial to reducing inventories.

Cargo surveyors found that Malaysian palm oil shipments from September 1 to 10 slipped between 11.7% and 17.5% compared to the previous month. Despite a dip in oil prices, palm oil remained poised to close the week above $100 a barrel for the first time since mid-May, thanks to persistent disruption worries along key Middle East shipping lanes.

Palm oil prices mirrored the fluctuations of other edible oils, as it vies for market share in the global vegetable oil arena.