MUMBAI, 05 Dec (Commoditiescontrol): Malaysian crude palm oil (CPO) futures advanced on Thursday, supported by expectations of lower palm oil inventories in November, boosting sentiment in the world's second-largest palm oil exporter.
The benchmark February contract on the Bursa Malaysia Derivatives Exchange rose by 70 ringgit, or 1.39%, to 5,102 ringgit ($1,152.47) per metric ton during the midday break.
A media survey indicated that Malaysia’s palm oil stocks likely dropped to 1.79 million tons in November, marking the second consecutive monthly decline. Analysts attribute this to heavy rains disrupting production. “The November stock drop could push Malaysian palm oil inventories below 2 million tons by the end of 2024, signaling a bullish trend for palm oil prices as we head into 2025,” noted a market analyst.
A combination of factors in neighboring Indonesia, the largest palm oil producer, adds to the bullish outlook. Surplus rainfall has caused landslides, hindering harvesting in key areas, while elsewhere, moderate rainfall has supported steady crop growth. Additionally, Indonesia's upcoming B40 biodiesel mandate and the Ramadan holiday season in Q1 2024 are expected to tighten exports further.
On the international front, rival edible oil markets painted a mixed picture. Dalian Commodity Exchange’s most active soyoil and palm oil contracts slipped 0.28% and 0.89%, respectively, while Chicago Board of Trade soyoil gained 0.75%. Palm oil prices often track movements in these markets due to competition in the global vegetable oil trade.
Adding to the complexity, the Malaysian ringgit strengthened by 0.52% against the U.S. dollar, potentially curbing the appeal of palm oil for foreign buyers. However, technical analysis suggests palm oil may retest the 5,162 ringgit resistance level, driven by wave-5 momentum.
As production challenges and global supply constraints persist, the palm oil market is likely to remain volatile, keeping traders and stakeholders on edge.
(By Commoditiescontrol Bureau; +91 98201 30172)
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