Malaysian palm oil price sink to 1-week low on high inventories

The Bursa Malaysia Derivatives Exchange’s benchmark palm oil contract for June delivery fell 0.8% at RM$2,120 a tonne by the close of the trade, making it the fourth session of losses out of the past five trading days.

Malaysian palm oil futures slid to more than a 1-week low on Thursday as traders get bearish on the high inventory levels.

The Bursa Malaysia Derivatives Exchange’s benchmark palm oil contract for June delivery fell 0.8% at RM$2,120 a tonne by the close of the trade, making it the fourth session of losses out of the past five trading days.

The price had edged higher by 0.2% on Wednesday’s close at RM$2,136 a tonne, after falling as much as 1.1%, its lowest since March 19.

Higher inventories and weak demand have affected the market but as the upcoming religious fasting period Ramadan is beginning soon, experts expect demand to ramp up as users stock up on oil for cooking purposes.

Malaysia’s palm oil inventories rose 1.3% in February compared to a month ago to 3.05 million tonnes.

According to data from Refinitiv Eikon, palm oil stockpiles reached 3.21 million tonnes in December, the highest since January 2000.

Prices of other palm oil and soybean oil also lower

Palm oil prices are affected by price changes in its competitor soybean oil, as both compete for a share of the global vegetable oil market.

The prices of other palm oil and soybean oil also sank on Thursday, with the Dalian May palm oil contract sliding 1.2%.

The Chicago May soybean oil contract edged lower by 0.2% and the May soybean oil contract on the Dalian Commodity Exchange was down by 0.8%.

Read more on Working group formed by Philippines, Malaysia, and Indonesia to tackle palm oil dumping.

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