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Palm slips over 1% on weak Dalian oils, high stockpiles

By Reuters News
A worker arranges palm oil fruits at a factory in Dengkil outside Kuala Lumpur August 30, 2007. REUTERS/Bazuki Muhammad (MALAYSIA)

KUALA LUMPUR, Oct 27 (Reuters) - Malaysian palm oil futures fell more than 1% on Tuesday, extending losses for a second straight session, as weaker Dalian oils and elevated stockpiles weighed on prices.

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 by the midday break.

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 2.4%, while its palm oil contract shed 3.15%. Soyoil prices on the Chicago Board of Trade were down 0.34%.

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

Oil prices edged lower as the potential for a resolution in the US-Israeli war on Iran kept supply fears at bay, but Brent stayed close to six-month highs as attacks on Saudi Arabia by Yemen's Houthis lowered hopes of immediate stability in the region. O/R

Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.

The ringgit , palm's currency of trade, strengthened 0.02% against the dollar, making the commodity slightly more expensive 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)

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