Palm oil posts its longest quarterly slump on record


Palm oil may rise to RM2,001 per tonne, as suggested by a projection analysis, said Wang Tao, a Reuters market analyst for commodities and energy technicals.

KUALA LUMPUR: Palm oil is stuck in rut and it’s not likely to get out anytime soon.

Benchmark futures in Malaysia are down 7.1% this quarter as the world’s most-consumed edible oil grapples with persistently high stockpiles in top growers amid lackluster demand. 

Its performance is in stark contrast to the Bloomberg agricultural spot price index, which is on course for the best quarterly gain in three years thanks to weather-related grain-supply disruption.

Another quarterly loss for palm would cap a seventh straight drop -- the worst run since futures started in 1995. The oil, used in everything from candy to biofuel, fell for a seventh straight day in Kuala Lumpur on Friday, touching 1,951 ringgit a ton ($471), the lowest intraday level in seven months.

Concerns over the U.S.-China trade war as well as too much supply and too little demand had been the dominant theme in most agriculture markets for much of 2019. That turned on its head for grain markets in the second quarter thanks to unprecedented wet weather in the U.S. With no similar supply disruption coming for palm, that left the economy-sapping trade war as a key factor weighing on prices.

"On top of that, we also have a lot of palm and soybean stocks globally,” said Ivy Ng, regional head of agribusiness at CIMB Investment Bank Bhd. She said output in Malaysia, the second-biggest grower, has exceeded market expectations. 

And while exports were strong earlier in the year, shipments have since weakened, and that’s raised expectations that stockpiles may pick up again. There’s also concern rising supplies in top grower Indonesia may increase competition with Malaysia and dampen prices, she said.

Adding to the bad news is the fact that oil palms are about to start their seasonal high-production cycle and that could further add to the glut.

With Indonesia’s production seen climbing by about 3 million metric tons in the year to September, prices are under pressure, according to Marcello Cultrera, institutional sales manager at Phillip Futures Sdn in Kuala Lumpur. "Palm oil’s outlook is bearish. 

Malaysian futures will hold between 1,850 ringgit to 2,150 ringgit until October, and after that may trade higher to 2,300 ringgit at most.” - Bloomberg
Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights
   

Next In Business News

Lalamove files confidentially for US$1bil US IPO
Serba Dinamik to decide on independent review scope on Friday
Scientex posts higher Q3 earnings, says Covid-19 lockdown to impact project billings�
FBM KLCI in the red as key heavyweights weigh
Singapore’s GIC buying 16% stake of Sunway Healthcare for RM750m
Moody's affirms Cagamas' A3 ratings; outlook stable
MGS yield curve steepened on lockdown due to infections surge
Euro zone business growth at 15-year high as demand unleashed -PMI
Pharmaniaga takes up financing facility under StanChart’s RM4.17b fund
Asian currencies gain as Fed reassures on rates; Thai cbank in focus

Stories You'll Enjoy


Vouchers