Palm falls nearly 2% on weaker Dalian oils, high stockpiles

KUALA LUMPUR, Oct 27 (Reuters) - Malaysian palm oil futures fell nearly 2% on Tuesday, extending losses for a second consecutive session, as weaker Dalian oils and high stockpiles pressured the market.

The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange slid 87 ringgit, or 1.82%, to 4,702 ringgit ($1,151.04) a metric ton at the close.

The market is tracking the weakness in Dalian, said a Kuala Lumpur-based trader.

Meanwhile, LSEG Agriculture Research in its October note said that palm oil prices strengthened in October, supported by continued concerns over El Nino-related production risks and stronger domestic demand from Indonesia's biodiesel programme.
The report, however, said that record-high Malaysian inventories would likely limit further gains.

Malaysia's palm oil stockpiles in September surged to 3.51 million metric tons as production hit an all-time high, surpassing market expectations and reaching unprecedented levels.

Dalian's most-active soyoil contract fell 2.62%, while its palm oil contract shed 3.54%. Soyoil prices on the Chicago Board of Trade were down 0.42%.

Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market.

Oil prices turned positive after a fall of about 1%, earlier in the session, as the chance of talks in Tehran eased fears of a broader Middle East supply shock, while renewed Houthi attacks on Saudi Arabia highlighted persistent risks. O/R

Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.

The ringgit , palm's currency of trade, weakened 0.05% against the dollar, making the commodity slightly cheaper for buyers holding foreign currencies.

Cargo surveyors estimated that exports of Malaysian palm oil products for October 1-25 rose between 46.9% and 67.7% from a month earlier.

($1 = 4.0850 ringgit)