Commodities

VEGOILS-Palm falls for second day on weak Oct exports, tight supply supports

Credit: REUTERS/LIM HUEY TENG

Malaysian palm oil futures fell more than 1% on Tuesday, declining for a second session as a slump in early October exports outweighed support from tightening inventories.

By Mei Mei Chu

KUALA LUMPUR, Oct 12 (Reuters) - Malaysian palm oil futures fell more than 1% on Tuesday, declining for a second session as a slump in early October exports outweighed support from tightening inventories.

The benchmark palm oil contract FCPOc3 for October delivery on the Bursa Malaysia Derivatives Exchange slid 64 ringgit, or 1.29%, to 4,891 ringgit ($1,173.18) a tonne by the midday break, marking its sharpest intraday drop since Oct. 1.

Exports of Malaysian palm oil products for Oct. 1-10 fell 7.5% to 500,381 tonnes from the same period in September, according to AmSpec Agri Malaysia on Monday.

Exports in October and November are unlikely to sustain the surge seen last month as key buyer India enters the winter season, UOB Kay Hian said in a note.

Importers usually switch to other edible oils during winter as palm oil solidifies at lower temperature.

But a recent rally in crude oil prices has narrowed the price spread between palm oil and gas oil, helping to boost biodiesel demand, UOB Kay Hian said.

Malaysia's end-September palm oil stocks fell more sharply than expected, down nearly 7% from the month before, as export demand surged while production stayed flat, Malaysian Palm Oil Board data showed on Monday.

"We project palm oil stocks to fall 0.8% month-on-month to 1.73 million tonnes by end-Oct 2021, with output up 1.5% and exports down 4% month-on-month," Ivy Ng, regional head of plantations research at CGS-CIMB Research, said in a note.

Tight near-term global edible oil inventories and expectation Malaysia's production would stay below potential for the rest of the year will keep prices firm at 3,500-4,500 ringgit per tonne this month, Ng said.

Dalian's most-active soyoil contract DBYcv1 fell 1.4%, while its palm oil contract DCPcv1 slipped 1.5%. Soyoil prices on the Chicago Board of Trade BOcv1 were down 0.2%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

(Reporting by Mei Mei Chu; Editing by Ramakrishnan M. and Subhranshu Sahu)

((Meifong.chu@thomsonreuters.com))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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