Malaysian CPO Futures Slip as Market Awaits Key Data from MPOB

MUMBAI, 9 Oct (Commoditiescontrol): Malaysian crude palm oil (CPO) futures fell on Wednesday, reversing earlier gains as traders awaited critical supply and demand data from the Malaysian Palm Oil Board (MPOB) for further market direction.

The benchmark December contract on the Bursa Malaysia Derivatives Exchange dropped 20 ringgit, or 0.47%, closing at 4,251 ringgit ($993.22) per metric ton.

Earlier in the day, the contract had risen by as much as 0.73% during the afternoon session, driven by expectations of subdued output growth and lower stock levels ahead of the release of the MPOB's September supply-demand report, scheduled for Thursday. However, the lack of new data led to cautious sentiment among market participants, leading to a decline by the session's end.

The broader edible oils market showed mixed signals. Dalian's most-active soyoil contract dropped by 1.5%, and its palm oil contract fell 2.05%, reflecting weaker market sentiment in China. Meanwhile, soyoil prices on the Chicago Board of Trade edged up by 0.49%, providing some support to global vegetable oil markets. Palm oil prices are often influenced by trends in other edible oils, as they compete for a share of the global market.

Currency movements added to the pressure on Malaysian palm oil. The ringgit strengthened by 0.12% against the US dollar, making palm oil more expensive for overseas buyers and potentially dampening export demand.

In the energy market, oil prices turned negative, erasing earlier gains as weak demand fundamentals and increased supply outweighed concerns over potential supply disruptions from geopolitical tensions in the Middle East and Hurricane Milton in the United States. Brent crude futures fell 0.16%, making palm oil a less attractive option for biodiesel feedstock when energy prices are lower.

Market dynamics are also being shaped by Indonesia's efforts to tighten supplies through higher biodiesel mandates. As the world's largest palm oil producer, Indonesia's policy changes could impact global availability and pricing in the months ahead, according to industry analysts.

Additionally, uncertainty surrounds the European Union's anti-deforestation law, with industry groups expressing concerns that a potential delay in implementing the legislation could impact companies that have already invested in compliance measures.

As traders anticipate the release of the MPOB report, the market remains focused on potential shifts in Malaysia’s production and stock levels, which could provide a clearer direction for palm oil prices in the near future.

(By Commoditiescontrol Bureau; +91 98201 30172)