Malaysian palm oil futures continued to fall on Friday

According to David Ng, a trader at Iceberg X in Kuala Lumpur, palm oil prices fell for another session, fueled by continued weakness in the Chicago soybean oil market. He also noted that the recent decline in export demand is putting pressure on prices in the short term. Ng forecasts palm oil prices to hold above 4,480 ringgit per tonne, with resistance at 4,750 ringgit per tonne.

Malaysian palm oil futures continued to fall on Friday, fueled by weakness in competing Dalian oils and concerns about Indonesia’s new export system, although they still managed to post a third consecutive weekly gain.

The benchmark FCPOc3 palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange fell 47 ringgit, or 1.02%, to 4,554 ringgit (US$1,131.43) per metric tonne at the close.

The contract has risen 0.42% this week.

The market traded lower due to a sell-off in Chinese vegetable oil futures, with the weakness further exacerbated by the prospect of aggressive palm oil selling in the Indonesian market ahead of the full implementation of the new export system, said Anilkumar Bagani, head of commodity research at Mumbai-based brokerage Sunvin Group.

On Friday, Indonesia passed a long-awaited regulation placing strategic commodity exports, including palm oil, under central government control. The move is aimed at increasing government revenue and stabilizing the currency. The transition period for this policy began on June 1, with full implementation scheduled for early next year.

However, the market is further softened by expectations of lower production in May, added Paramalingam Supramaniam, director of brokerage Pelindung Bestari.

The most active Dalian soybean oil contract fell 1.32%, while the CPO1 palm oil contract fell 3.29%. Soybean oil prices on the Chicago Mercantile Exchange rose 0.09%.

Palm oil prices follow the price movements of competing edible oils as it fights for share in the global vegetable oil market.

The ringgit weakened 0.37% against the dollar, making the commodity cheaper for buyers holding foreign currency.

Oil prices fell slightly after Oman said operations at the Mina al-Fahal port were continuing as usual, following a Reuters report that oil loading had been suspended following the explosion.

Weaker oil futures are making palm oil a less attractive option for biodiesel production.

Tags: prices, palm oil