Palm slips on weak rival oils, heads for steepest weekly fall in nearly two years

KUALA LUMPUR — Malaysian palm oil prices tumbled over 2% on Thursday, nearing an eight-month low as worries about potentially higher-than-anticipated stocks and production, coupled with paltry rival vegetable oils, weighed on the market. The January delivery benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange plunged 121 ringgit, or 2.69%, to 4,375 ringgit ($1,081.31) per metric ton, its lowest closing price since March 6.

Research head Anilkumar Bagani of Mumbai-based vegetable oil broker Sunvin Group explained the bearish trend, citing fears of a larger inventory surge as production is anticipated to exceed recent estimates. Indonesia may also step up palm oil exports over the next two months, taking advantage of lower export tax brackets and avert a potential Danantara transaction fee on export registrations starting January, Bagani added.

According to a Reuters survey, Malaysia's palm oil inventories likely expanded by 6.8% from the record 3.51 million tons in September to 3.75 million tons. The Malaysian Palm Oil Board is set to release its October supply and demand data on November 10. Meanwhile, Dalian’s most-active soyoil contract dropped 0.74%, and its palm oil contract fell 1.64%.

Soyoil prices on the Chicago Board of Trade slipped 0.96%. Palm oil mirrors the price movements of other edible oils, competing for a slice of the global vegetable oils market. Brent crude futures ticked higher as investors pondered the future course of the U.S.-Israeli war with Iran following President Donald Trump’s Republican Party’s heavy losses in the recent midterm elections.

Stronger crude oil prices rendered palm a more appealing option for biodiesel feedstock. The ringgit, palm's currency of trade, appreciated 0.42% against the dollar, rendering the commodity slightly pricier for foreign currency holders.