Palm oil falls to 11-week low on weak exports, rising output

Palm oil prices hit an 11-week low on Thursday, as weak exports, higher production and stronger Chinese crude oil futures weighed on the benchmark contract. The December palm oil contract on the Bursa Malaysia Derivatives Exchange fell 1.24% to 4,553 ringgit ($1,115.11) per metric ton. A trader attributed the decline to bearish sentiment in local markets, citing production increases, slower exports and expected inventories exceeding 3 million tonnes.

Soyoil prices on the Chicago Board of Trade decreased 0.59% on the same day. Chinese markets were closed for a holiday period. Palm oil prices are expected to stay between 4,500 and 5,000 ringgit a metric ton through December, despite forecasts of reduced production next year due to El Niño. September exports of Malaysian palm oil products dropped by 17.1% to 28.8% compared to the previous month, according to cargo surveyors Intertek Testing Services and AmSpec Agri Malaysia.

Indonesia exported 16.13 million metric tons of crude and refined palm oil from January to August, a 0.39% decrease year-over-year. The government set its October crude palm oil reference price at $1,042.15 per ton. Oil prices climbed around 2% on Thursday after China halted exports of oil products, tightening fuel markets already struggling with global supply issues, while investors monitored the progress of diplomatic efforts to resolve the US-Iran conflict.

A stronger crude oil futures market makes palm oil a more attractive option for biodiesel feedstock. The Malaysian ringgit, the currency used to trade palm oil, weakened 0.2% against the US dollar, making the commodity more affordable for buyers holding foreign currencies.