07.10.2021 (www.hellenicshippingnews.com) - Malaysian palm oil futures fell on Thursday after a three-day rally to a record high, as crude oil prices declined although worries of tight supply lent some support to the vegetable oil.
The benchmark palm oil contract FCPOc3 for December delivery on the Bursa Malaysia Derivatives Exchange slid 47 ringgit, or 0.96%, to 4,825 ringgit ($1,154.03) a tonne by the midday break, also taking cues from overnight losses in rival soyoil.
Oil prices dropped for a second session, under pressure from an unexpected rise in U.S. crude stocks that raised concerns over demand after prices rallied to multi-year highs.
The weakness in crude oil if persists longer can put further pressure on vegetable oil markets as the current rally is mainly driven by the rise in energy prices and freight costs, said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
In top palm buyer India, demand was slow due to deep negative import and processing margins and surging inventories after record imports last month, Bagani said.
The Malaysian Palm Oil Association estimated September production fell 1.44% from the month before to 1.68 million tonnes, traders said on Thursday.
Import demand for palm oil in 2021/22 is expected to edge higher on the back of favourable trade policies and as large-scale vaccination rollouts lift demand, Refinitiv Commodities Research said in a note.
“With a typical low palm oil production cycle ahead, and expectations for steady-to-strong demand from key importers, the pace of ending-stock build-up is expected to slow,” Refinitiv said.
Soyoil prices on the Chicago Board of Trade BOcv1 were up 0.5%, after declining 1.3% in the previous session. The Dalian exchange is closed for a public holiday and will reopen on Friday.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Source: Reuters (Reporting by Mei Mei Chu; Editing by Subhranshu Sahu)