MUMBAI, 8 Oct (Commoditiescontrol): Malaysian crude palm oil (CPO) futures fell on Tuesday, pressured by profit-taking and declines in both Chicago soyoil and global crude oil prices. The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange dropped 1.66%, settling at 4,272 ringgit ($996.97) per metric ton by the close.
A local trader noted that the dip in CPO futures is primarily due to profit-taking, coupled with a subdued performance in the Dalian Commodity Exchange's vegetable oils market. The trader added that the Dalian vegetable oils contract would need approximately 800 points to catch up with the Malaysian benchmark.
This decline follows a high in the previous session when the benchmark palm oil contract reached its highest closing in six months at 4,349 ringgit. Despite Tuesday's dip, the contract has gained nearly 7% in October so far.
Meanwhile, as markets reopened after a week-long holiday in China, the Dalian Commodity Exchange's soyoil contract rose 0.81%, and its palm oil contract increased by 2.51%. In contrast, soyoil prices on the Chicago Board of Trade fell 2.2%, adding to the pressure on Malaysian CPO prices.
Global production outlooks also contributed to market sentiment. Senior analyst David Mielke from Oil World shared estimates that global palm oil production could increase by 2.3 million metric tons in the 2024/25 season compared to the previous year. Glenauk Economics forecasted Malaysia's palm oil production to reach 19.4 million tons in 2024, while output from Indonesia, the world’s largest palm oil producer, is expected to be 1 million tons lower than the 54.84 million tons produced in 2023.
Palm oil prices are heavily influenced by the movements of rival edible oils, as they compete for market share in the global vegetable oils market. Additionally, a decline in crude oil prices on Tuesday further pressured palm oil, making it less attractive for use as biodiesel feedstock. Brent crude futures for December fell 1.95%, reaching $79.35 a barrel by 0807 GMT, as traders locked in profits following recent gains driven by concerns over potential conflicts in the Middle East.
Technical analysts suggest that palm oil may test a resistance level at 4,432 ringgit per metric ton. Should prices break above this level, they could advance further into the range of 4,518 to 4,571 ringgit per metric ton.
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(By Commoditiescontrol Bureau; +91 98201 30172)
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