MUMBAI, 05 Dec (Commoditiescontrol): Malaysian crude palm oil (CPO) futures climbed on Thursday, driven by expectations of declining November stocks in the country, the world's second-largest palm oil exporter.
The benchmark February contract on the Bursa Malaysia Derivatives Exchange gained 106 ringgit, or 2.11%, to close at 5,138 ringgit ($1,161.13) per metric ton.
A recent media survey indicated that Malaysia's palm oil stocks likely fell to 1.79 million tons in November, marking the second consecutive monthly decline. Analysts attribute the drop to heavy rains disrupting production across key growing regions. "The November stock drop could push Malaysian palm oil inventories below 2 million tons by the end of 2024, signaling a bullish trend for palm oil prices as we head into 2025," commented a market analyst.
Neighboring Indonesia, the world's largest palm oil producer, has also faced challenges due to surplus rainfall. Landslides have hindered harvesting in some areas, while moderate rainfall elsewhere has supported steady crop growth. Further tightening of palm oil exports is anticipated in early 2024 due to Indonesia's upcoming B40 biodiesel mandate and the Ramadan holiday season, both of which are expected to boost domestic demand.
The global edible oils market remained mixed. On the Dalian Commodity Exchange, the most-active soyoil contract slipped 0.3%, while its palm oil contract fell 1.04%. In contrast, soyoil on the Chicago Board of Trade rose 0.72%. Palm oil prices often track the movement of rival edible oils due to competition for a share in the global vegetable oils market.
The strengthening of the Malaysian ringgit by 0.56% against the U.S. dollar also impacted trade. A stronger ringgit typically makes palm oil less attractive to foreign buyers, as it increases costs in terms of other currencies. Despite this, technical analysis suggests that palm oil could retest the 5,162 ringgit resistance level, driven by wave-5 momentum.
The combination of declining stocks in Malaysia and production challenges in Indonesia points to a bullish outlook for palm oil prices. However, global supply constraints and currency fluctuations are expected to keep the market volatile. Analysts advise traders and stakeholders to remain cautious as the market navigates these uncertainties.
As production and logistical issues persist, palm oil is likely to remain a focal point in the global edible oil market, with potential for further price fluctuations in the coming months.
(By Commoditiescontrol Bureau; +91 98201 30172)
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