Palm hits over 5-week low on rising stock expectations, subdued demand

Malaysian palm oil futures gave up earlier gains on Tuesday, sliding to their weakest level in more than five weeks, according to Business Recorder. The December contract on the Bursa Malaysia Derivatives Exchange lost 47 ringgit, or 0.97 per cent, closing at 4,810 ringgit ($1,180.66) per metric ton, its softest finish since August 14. Traders were weighing expectations of rising stocks and weak demand ahead of a meeting of the US and Chinese leaders.

Sandeep Singh of The Farm Trade, a trading and consultancy house in Kuala Lumpur, said the planned Trump-Xi talks were underpinning farm commodities more broadly, soyoil in particular. He also said El Nino-related risks would stay a key worry until mid-next-year. He expects Malaysian ending stocks to top 3 million tons, possibly nearing record levels, as demand stays muted.

Dalian soyoil futures moved up 0.54 per cent, whereas the palm contract there retreated 0.49 per cent. At the Chicago Board of Trade, soyoil lost 1.32 per cent. Crude oil fell after Iran indicated the Strait of Hormuz could reopen within seven days, provided the US first eases military pressure. Weaker crude makes palm less attractive as biodiesel feedstock, and the Malaysian Palm Oil Council expects crude palm prices to stay above $1,154 per metric ton in October and for the rest of the year, supported by weather risks and firm energy markets.