(Updated)

Palm hits lowest in over 1-1/2 years as recession fears dent demand

Palm hits lowest in over 1-1/2 years as recession fears dent demand
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JAKARTA (Sept 28): The Malaysian palm oil futures on Wednesday (Sept 28) extended losses for a fifth straight day, and hit a near 20-month low during the session, as recession fears hurt demand in edible oils market.

The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange fell 8.46% to close at RM3,225 (US$696.85) per tonne.

Palm hit an intraday low of RM3,220, the lowest since Feb 3, 2021. It lost 17% over five days.

As prices broke below the RM3,430 level on Wednesday, traders "were aggravated to clear their long positions", a trader in Kuala Lumpur said.

"Global turmoil in energy and share markets added to selling pressure in edible oils side."

World shares sank to two-year lows, hammered by spiralling borrowing costs that intensified fears of a global recession and sent investors into the arms of the safe-haven dollar. 

Oil prices fell more 1%, pressured by a strengthening dollar and crude storage builds that offset support from US production cuts caused by Hurricane Ian.

Dalian's most-active soyoil contract fell 0.36%, while its palm oil contract dropped 2.76%. Soyoil prices on the Chicago Board of Trade declined 1.57%.

Palm oil is affected by price movements in related oils, as they compete for a share in the global vegetable oils market, while weaker crude oil makes palm oil less attractive as biofuel feedstock.

Exports of Malaysian palm oil products for Sept 1-25 rose between 18.6% and 20.9% from a month-ago figures, cargo surveyors said. 

Meanwhile, the world's top palm oil producer Indonesia plans to set its crude palm oil reference price at US$792.19 per tonne for Oct 1-15, a government official said, which would place its export tax at US$33 per tonne, down from currently US$52 per tonne. 

(US$1 = RM4.6280)