Palm oil closes at a seven-month-low due to weak exports and competing oils

The price of Malaysian palm oils futures fell to their lowest level in over seven months on Monday, due to weak exports in August so far and weaker rival oils. Lower inventories, however, put a ceiling on the declines.

The benchmark contract for palm oil delivery in July on Bursa Derivatives Malaysia Exchange dropped 0.51%, to 3,689 Ringgit ($829.73), ending at its lowest level since January 5.

According to LSEG, the cargo surveyor Societe Generale de Surveillance estimates Malaysian exports for August 1-10 at 488,898 metric tonnes, a 13.2% decrease from a previous month.

Mitesh Saiya is the trading manager of Mumbai-based Kantilal, Laxmichand and Co. He said that August exports are lower than usual, which could help to increase inventories in the month.

He said that the shrinking price differential between palm oil and soyoil is pushing up demand for palm.

Malaysian Palm Oil Board reported that the country's palm oils stocks fell by 5.35% in July compared to the previous month, falling from 1.73 million metric tonnes. This was due to the fact that exports grew faster than production.

Dalian's palm oil contract, which is the most active contract, lost 1.71%. Chicago Board of Trade soyoil fell by 1.53%.

As they compete to gain a share in the global vegetable oil market, palm oil monitors price movements of related oils.

After five sessions of rising oil prices, markets refocused their attention on the demand side after OPEC cut its forecasts for growth in demand in 2024 because of softer expectations in China.

The Malaysian Ringgit, the currency used to trade palm oil, gained 0.2% in value against the U.S. Dollar. Palm oil becomes less appealing to foreign currency holders when the ringgit strengthens. $1 = 4.4460 Ringgit (Reporting and editing by Sherry Jac-Phillips; Eileen Soreng, Varun H. K. and Varun Jacob-Phillips)

(source: Reuters)