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Palm oil futures in Malaysia slipped for the second straight session, with the benchmark contract down 1.72% to 4,466 ringgit per metric ton, as traders prepared for climbing inventories and fluctuating edible oil prices worldwide.
Palm oil is feeling the squeeze from expectations that Malaysian inventories will climb, leaving investors wary. According to a trader at Iceberg X, cautious attitudes are dominating, especially as local production ramps up. The impact stretches far beyond Malaysia: soyoil and palm oil futures also dropped on China’s Dalian Commodity Exchange, while US soyoil prices firmed up. Since palm oil directly competes with other edible oils, price moves in one market quickly spill into others. Meanwhile, crude oil prices have rebounded, boosting the case for palm oil as a biodiesel ingredient. But despite Malaysia’s exports jumping nearly 20% in early October, official forecasts still see average prices cooling next year amid expanding output worldwide.
The edible oil market is at a crossroads, as investors balance fears of oversupply with hopes for a rebound tied to energy prices and export strength. With Malaysia’s ringgit holding steady against the US dollar and export numbers jumping early this month, traders see near-term price softness but are watching technical signals for stabilization above 4,500 ringgit per ton. Volatility looks set to stick around as other global oilseed prices and crude oil both sway the direction.
Palm oil sits at the heart of global trends in both food and fuel. The Malaysian government expects average prices to dip to between 3,900 and 4,100 ringgit per ton next year as output climbs among the world’s biggest producers. If crude oil keeps gaining, demand for palm oil in biodiesel could pick up. But global economic policy and US-China trade negotiations will remain critical wildcards for prices in the months ahead.
Source: Online/OFA
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