April 15, 2024

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Malaysian palm oil futures fall on stronger ringgit, inventory expectations

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BEIJING: Malaysian palm oil futures fell for a second consecutive day on Monday, weighed down by a stronger ringgit and expectations of higher stocks and production in October.

The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange fell 16 ringgit, or 0.42 percent, to 3,752 ringgit ($809.84). The ringgit, the currency in which palm oil is traded, strengthened 1.97 percent against the dollar, making it more expensive for buyers with foreign currency holdings to purchase palm oil.

“Prices weakened on the back of a higher-than-expected forecast for Malaysian palm oil production in October,” said Anilkumar Bagani, head of research at Mumbai-based vegetable oil broker Sunvin Group. Bagani noted that the Malaysian Palm Oil Association expects production to rise 7.13 percent in October.

Investors are also waiting for the commission’s supply and demand data scheduled for release on Friday. A Reuters poll on Friday showed stocks at the end of October reached their highest level since May 2019 as production growth outpaced export growth, adding to inventories for the month.

Malaysian palm oil futures fall on stronger ringgit, inventory expectations

Global palm oil production is likely to fall next year due to the El Nino weather pattern, while demand from the edible oil and energy sectors is expected to grow, supporting palm oil prices, leading industry analysts said on Friday.

Indonesia, the biggest producer, is expected to cut output by at least 1 million tons next year, while rival Malaysia’s output is expected to remain unchanged, analyst Dorab Mistry said.

Indonesia’s domestic biodiesel palm oil consumption is expected to exceed food consumption for the first time in 2023, the Indonesian Palm Oil Association announced Friday.

The most active soybean oil contract in Dalian rose 0.6 percent, while the palm oil contract gained 0.3 percent. Soybean oil prices on the Chicago Board of Trade rose 1.2 percent.

Palm oil has been affected by price movements of related oils in the race for global vegetable oil market share.

Malaysian Palm Oil Association calls for review of windfall tax

KUALA LUMPUR: The Malaysian Palm Oil Association (MPOA) on Monday urged the government to review the windfall profits tax imposed on the palm oil industry.

The association argued that the windfall tax, which is levied based on the average gross palm oil price above a certain threshold, places a heavy financial burden on palm oil producers and exporters. They also argue that the tax discourages investment in the industry and reduces the competitiveness of Malaysian palm oil in the global market.

The government has defended the tax, saying it is necessary to generate additional revenue for national development programs. However, the palm oil industry insists that the tax is unfair and should be reviewed.

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