KUALA LUMPUR, Nov 15 – Malaysian palm oil futures fell below the 2,000 ringgit level for the first time in three years on Wednesday, weighed down by losses in related edible oils on China’s Dalian Commodity Exchange and lower than forecast year-end inventory levels.
The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange closed down 1.7 percent at 1,973 ringgit ($470.38) a tonne, its seventh consecutive day of losses.
It earlier fell as much as 2.1 percent to 1,965 ringgit, its weakest level since August 2015.
Trading volumes totalled 55,797 lots of 25 tonnes each on Wednesday.
“Yesterday crude oil came down a lot… Dalian is also sharply down. All this not good for the palm market,” said a Kuala Lumpur-based futures trader.
Official data from the Malaysian Palm Oil Board on Monday showed end-October stockpiles grew 7.6 percent to 2.72 million tonnes, while production rose 6 percent to 1.96 million tonnes.
The trader said a revision to a leading analyst’s forecast for Malaysian inventories in December also contributed to the decline in palm.
Malaysia’s palm oil stocks at end-December are expected to climb to 3.5 million tonnes, said Dorab Mistry at an industry conference in China on Wednesday. He also raised his forecasts for Indonesia’s 2018 palm oil output to 41 million tonnes from 38.5 million tonnes.
Mistry previously forecast that Malaysian stocks are expected to finish this year at between 3 million and 3.3 million tonnes.
In other related edible oils, the Chicago December soybean oil contract was down 0.2 percent, while the January soybean oil contract on the Dalian Commodity Exchange dropped 1.6 percent.
Meanwhile, the January palm oil contract fell 2.2 percent.
Palm oil prices are affected by movements of other edible oils as they compete for a share in the global vegetable oil market.
Palm oil is expected to break a support at 1,996 ringgit per tonne, and fall into a range of 1,933-1,972 ringgit, according to Reuters market analyst for commodities and energy technicals Wang Tao. – Reuters