KUALA LUMPUR: Malaysian palm oil futures fell for a seventh consecutive session on Thursday to a three-month low, as concerns over slowing demand and rising production dragged down the market.
There was further pressure on prices as Europeans reduce consumption amid environmental concerns associated with the tropical product. The benchmark third-month palm oil contract on the Bursa Malaysia Derivatives Exchange closed down 1.4 per cent at 2,062 ringgit ($504.28) a tonne. Earlier in the session, the contract dropped to its weakest since mid-December at 2,051 ringgit a tonne. Global palm oil demand may suffer its first contraction in two decades during the 2019/20 crop year due to rising domestic oilseed supplies in top buyer India and slowing demand in Europe and China, industry participants told Reuters.
“There is ample supply of palm oil in consuming countries, both India and China, that is why you see pressure on prices,” said one Singapore-based trader. The European Commission has concluded that palm oil cultivation results in excessive deforestation and its use in transport fuel should be phased out, setting the bloc on a collision course with major palm oil producers Malaysia and Indonesia.
Published in Dawn, March 15th, 2019