Palm drops to near 5-month low on rising stocks, slow demand outlook

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KUALA LUMPUR (Dec 6): Malaysian palm oil futures fell to a near five-month low on Wednesday evening, charting a third straight day of losses, on expectations of rising stockpiles and slowing demand. 

The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange was down 1.1% at 2,535 ringgit (US$622.39) a tonne at the close of trade, its sharpest daily decline in over a week. 

It earlier fell to an intraday low of 2,530 ringgit, its weakest since July 19.

Palm is also down 2.6% so far this week, on track for a sixth week of losses.

Traded volumes stood at 40,862 lots of 25 tonnes each on Wednesday evening.

"Expectations of rising stocks is creating a bearish scenario, coupled with a slowdown in exports," said a trader in Kuala Lumpur. "Buying demand is slow."

Another attributed palm's decline to a technical selloff. 

Palm oil inventories in Malaysia are forecast to rise to the highest in nearly two years at the end of November, as a fall in exports outweighs a decline in production, a Reuters poll showed.

Stockpiles are expected to swell 11.4% to 2.44 million tonnes from the end of October, while output is expected to fall 3% on-month to 1.95 million tonnes.

Exports are seen falling in November, down 6% at 1.45 million tonnes, the first monthly decline in five months.

In other related oils, the January soybean oil contract on the Chicago Board of Trade dropped 0.3%, while the January soybean oil contract on the Dalian Commodity Exchange fell 0.1%.

The Dalian January palm olein contract declined 0.4%.

Palm oil prices are affected by movements in other edible oils, as they compete for a share of the global vegetable oils market.
 Palm, soy and crude oil prices at 1046 GMT

Contract Month Last Change Low High Volume
MY PALM OIL DEC7 2445 -21.00 2445 2460 139
MY PALM OIL JAN8 2509 -24.00 2500 2540 3341
MY PALM OIL FEB8 2537 -28.00 2530 2572 18225
CHINA PALM OLEIN MAY8 5414 -12.00 5380 5436 281102
CHINA SOYOIL MAY8 5996 -14.00 5964 6012 242468
CBOT SOY OIL JAN8 33.4 -0.04 33.33 33.59 5720
INDIA PALM OIL DEC7 574.30 -4.00 573.20 579.5 902
INDIA SOYOIL DEC7 722.1 -3.90 721.55 725.8 6820
NYMEX CRUDE JAN8 57.25 -0.37 57.16 57.57 77017

 Palm oil prices in Malaysian ringgit per tonne
 CBOT soy oil in U.S. cents per pound
 Dalian soy oil and RBD palm olein in Chinese yuan per tonne
 India soy oil in Indian rupee per 10 kg
 Crude in U.S. dollars per barrel
(US$1 = 4.0730 ringgit)
(US$1 = 64.5000 Indian rupees)
(US$1 = 6.6135 Chinese yuan)