Palm oil falls over 1% on exports, rival oils weakness

Malaysian palm oil futures declined more than 1% on Thursday, slipping from a 21-month peak amid predictions of increasing September inventories, limited exports, and a slump in rival vegetable oils. The December December delivery price for palm oil on the Bursa Malaysia Derivatives Exchange slipped 1.16% to 4,940 ringgit per metric ton.

Palm oil's price movements mirror those of comparable edible oils as it fights for a slice of the worldwide vegetable oils market. The December contract for Dalian's most-traded soyoil fell 0.34%, while its palm oil contract fell 1.06%. Soyoil prices on the Chicago Board of Trade decreased 1.02%. Analyst Paramalingam Supramaniam, from the Pelindung Bestari brokerage in Selangor, noted that "Palm oil fundamentals are still undermined by poor September exports and expectations of rising end-month stocks, possibly reaching around 3 million tons."

The market received some encouragement from speculation that India may lower import duties on vegetable oils and that Indonesia might raise its biodiesel blending mandate. Cargo surveyors estimated that Malaysian palm oil exports for September 1-15 fell between 17.8% and 25.6% compared to the previous month. Palm output in Indonesia's chief producing area of Kalimantan could drop by 12% to 15% in the fourth quarter, due to extended dry weather and extensive fires.

The Indonesian ringgit, palm's trading currency, slipped 0.33% against the US dollar, making the commodity more affordable for foreign buyers. Oil prices fell on Thursday, extending losses as reports of additional Saudi crude shipments through Oman reduced supply worries, though prices remained above $100 a barrel due to concerns that the Middle East conflict might escalate. Lower crude oil futures make palm a less desirable option for biodiesel feedstock.