Malaysian palm oil futures fell on Friday, heading toward a second consecutive week of losses, driven by declining soybean prices and concerns over weakening demand. The benchmark February delivery contract on the Bursa Malaysia Derivatives Exchange dropped by 81 ringgit, or 1.7%, to 4,691 ringgit ($1,050.62) per metric ton by midday.
David Ng, a proprietary trader at Iceberg X Sdn Bhd, attributed the decline to softer soybean oil prices and market concerns about reduced demand in the coming weeks. On the Dalian Commodity Exchange, soyoil and palm oil contracts fell by 1.2% and 0.91%, respectively, while Chicago Board of Trade soyoil prices dipped 0.14%. Palm oil often tracks the price trends of other edible oils due to its role in the global vegetable oils market.
Crude oil prices surged after Russia launched a ballistic missile at Ukraine and warned of escalating conflict, fueling fears of constrained oil supplies. Higher crude oil prices generally support palm oil’s appeal as a biodiesel feedstock.
The ringgit weakened by 0.11% against the US dollar, making palm oil more affordable for foreign buyers. Meanwhile, Indonesia’s palm oil stocks increased in September as exports and domestic consumption declined, with a slight improvement in output, according to data from the GAPKI, Indonesia’s main palm oil industry association.
Palm oil prices may test a support level at 4,647 ringgit per metric ton, and a break below this could push prices further into the 4,510-4,595 ringgit range, according to Reuters technical analyst Wang Tao.
