Palm rises on stronger crude oil, Dalian soyoil

Malaysian palm oil futures dropped nearly 2% on Tuesday, continuing a downward trend for a second day, due to weaker Dalian oils and high stockpiles weighing on the market. The benchmark palm oil contract for January delivery on Bursa Malaysia Derivatives Exchange declined 87 ringgit, or 1.82%, to 4,702 ringgit ($1,151.04) a metric ton at the close.

Market observers noted the weakness in Dalian as a key factor, according to a local trader. Meanwhile, LSEG Agriculture Research highlighted that palm oil prices rose in October, driven by ongoing concerns about El Nino-related production risks and growing domestic demand from Indonesia's biodiesel program. However, the report cautioned that soaring Malaysian inventories could curb further price gains.

Malaysia's palm oil reserves in September skyrocketed to 3.51 million metric tons, driven by record-high production that exceeded expectations and reached record highs. Dalian's most-active soyoil contract fell 2.62%, while its palm oil contract lost 3.54%. Soy oil prices on the Chicago Board of Trade slipped 0.42%. Like other edible oils, palm oil follows price movements, competing for a share of the global vegetable oils market.

Oil prices rebounded after a 1% decline early in the session, as talks in Tehran appeared to ease worries of a wider Middle East supply disruption, while renewed Houthi attacks in Saudi Arabia underscored persistent risks. The weakening ringgit, palm's currency, made the commodity slightly less expensive for foreign buyers. Cargo surveyors estimated that Malaysian palm oil product exports from October 1-25 grew between 46.9% and 67.7% compared to the previous month.