Palm hits four-month low on expectations of record October stocks

Malaysian palm oil futures took a dive on Wednesday, slipping to a four-month low, as market participants anticipated record-high stockpiles and weaker Dalian palm olein prices. The benchmark January delivery palm oil contract on the Bursa Malaysia Derivatives Exchange plummeted by 55 ringgit, or 1.21%, to 4,496 ringgit ($1,104.67) per metric ton, marking the lowest closing price since July 3.

Traders noted that polls on Tuesday suggested palm oil end-stocks likely hit a record high last month, as a Kuala Lumpur-based trader reported. According to a Reuters survey, Malaysia's palm oil inventories had surged 6.8% from September's record 3.51 million tons to 3.75 million tons. The trader explained that "overnight weakness in Dalian palm olein, partly pressured by the decline in crude palm oil futures, added to the negative sentiment."

Dalian's main soyoil contract declined 1.45%, while its palm oil contract dropped 2.91%. Meanwhile, soyoil prices on the Chicago Board of Trade slipped by 0.64%. Palm oil closely follows the price movements of similar edible oils, as it competes for a larger share of the global vegetable oils market. As investors awaited the US's response to the conflict in Iran, following Democrats' control of Congress from the midterm elections, crude oil futures surged, making palm oil a more appealing option for biodiesel feedstock.

The Malaysian ringgit, the currency used in palm oil trading, also strengthened 0.34% against the US dollar, making the commodity slightly more expensive for foreign buyers.