Malaysian palm oil futures declined for a sixth consecutive session on Wednesday to their lowest in three months on pressure from expectations of lower demand in top importer India and rising domestic production.
The benchmark third-month palm oil contract on the Bursa Malaysia Derivatives Exchange finished down 1.3 percent at 2,089 ringgit a tonne. Earlier in the session, the market hit its weakest since mid-December at 2,070 ringgit a tonne.
World palm oil demand may suffer its first contraction in two decades during the 2019/20 crop year due to rising domestic oilseed supplies in India and slowing demand in Europe and China, industry sources told Reuters.
Production of rapeseed, used to make an alternative oil to palm, is likely to be a record 8 million tonnes. So, India's imports will be the same around the last level of 15 million tonnes, said a top official of the Solvent Extractors Association of India, the industry group representing oilseed producers.
Palm oil exports from Malaysia, the world’s second-largest palm producer, to the European Union slid to 264,005 tonnes in February from 405,867 tonnes a month ago, latest data from cargo surveyor Societe Generale de Surveillance (SGS) showed.
China’s palm oil purchases from Malaysia also dropped to 98,635 tonnes last month from 264,722 tonnes in January.