By Mei Mei Chu
KUALA LUMPUR, Nov 9 (Reuters) – Malaysian palm oil futures declined on Tuesday, falling for a second session of the last three, as losses in rival oils and concerns that a slowdown in demand would raise inventories weighed on sentiment.
The benchmark palm oil contract FCPOc3 for January delivery on the Bursa Malaysia Derivatives Exchange slid 126 ringgit, or 2.57%, to 4,769 ringgit ($1,146.95) a tonne by the midday break.
“Physical prices are holding strong but futures in Bursa Malaysia is coming down fast,” a Kuala Lumpur-based trader said.
Weaker Dalian palm olein and overnight drop in soyoil prices, and concerns over lower Indian imports are weighing in, the trader added.
A typical low palm oil production cycle ahead will likely draw down stock levels but potential slower exports due to high prices, India edible oil duties, post-festive season and the upcoming winter season could keep inventories elevated, Refinitiv Agriculture Research said in a note.
“If key destinations slow down their purchases in the weeks ahead, we expect ending stocks build-up sooner, weighing on the palm market,” Refinitiv wrote.
A higher-than-expected forecast of 1.7% rise in October production by the Malaysian Palm Oil Association on Monday have also stoked concerns that inventories may rise faster than previously estimated.
The Malaysian Palm Oil Board is scheduled to release official data on Wednesday.
Dalian’s most-active soyoil contract DBYcv1 fell 1.4%, while its palm oil contract DCPcv1 slipped 1%. Soyoil prices on the Chicago Board of Trade BOcv1 were down 0.3%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
($1 = 4.1580 ringgit)
(Reporting by Mei Mei Chu; Editing by Rashmi Aich)
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