SINGAPORE: Malaysian palm oil futures closed at their lowest level in over seven months on Tuesday, affected by weak exports in August and declining prices of rival oils, although reduced inventories helped limit further losses.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange dropped 0.51% to 3,689 ringgit ($829.73) per metric ton, marking its lowest point since January 5.
Cargo surveyor Societe Generale de Surveillance (SGS) reported that Malaysia’s exports from August 1-10 totaled 489,898 metric tons, down 13.2% from the previous month, according to LSEG.
Mitesh Saiya, trading manager at Mumbai-based Kantilal Laxmichand & Co, noted that the reduced August exports might lead to an increase in inventories for the month. He also pointed out that the narrowing price difference between soyoil and palm oil is reducing demand for palm oil.
The Malaysian Palm Oil Board reported that July’s palm oil stocks fell by 5.35% from the previous month to 1.73 million metric tons, as export growth outpaced improved production.
Dalian’s most-active soyoil contract declined by 2.44%, and its palm oil contract fell by 1.71%. Soyoil prices on the Chicago Board of Trade also dropped by 1.53%.
Palm oil prices often follow the trends of related oils due to competition in the global vegetable oils market.
Oil prices stabilized after five consecutive sessions of increases, as markets shifted focus to demand concerns following OPEC’s revised forecast for lower demand growth in 2024 due to softer expectations in China.
The Malaysian ringgit, the currency used for palm oil trade, appreciated by 0.2% against the U.S. dollar, making palm oil less attractive to foreign buyers.
