Malaysian palm oil futures fell more than 1% on Thursday

According to David Ng, a trader at Iceberg X in Kuala Lumpur, palm oil prices fell amid falling crude and soybean oil prices. He also noted that persistently high inventory levels had a negative impact on market sentiment. Ng expects oil futures to find support at 3,900 ringgit per tonne and face resistance at 4,150 ringgit per tonne.

Malaysian palm oil futures fell more than 1% for the third consecutive session on Thursday, weighed down by weaker edible oil competitors, lower crude prices, and Indonesia’s plans to phase out B50 biodiesel production.

The benchmark FCPO1 palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange fell 60 ringgit, or 1.49%, to close at 3,980 ringgit (US$982.23) per metric tonne.

Palm oil futures followed sharp declines in Chinese vegetable oil and Chicago soybean oil futures during the Asian trading session, as well as weaker crude oil prices, said Anilkumar Bagani, head of commodity research at Sunvin Group, a Mumbai-based brokerage.

Indonesia’s decision to abandon plans to produce B50 biodiesel also led to a decline in the palm oil premium, Bagani said.

Indonesia abandoned plans to introduce a mandatory B50 standard for palm oil-based diesel fuel this year and will stick with the B40 standard due to technical and financial issues, government officials said, easing concerns about a shortage of global palm oil supplies.

“The market is now awaiting palm oil production and export data for the first half of January,” Bagani said.

According to cargo experts, Malaysian palm oil exports increased by 17.5-18.6% from the previous month between January 1 and 15.

The most actively traded Dalian soybean oil contract fell 0.68%, while the palm oil contract declined 2.03%. Soybean oil prices on the Chicago Mercantile Exchange fell 0.98%.

Palm oil prices follow those of competing edible oils as they compete for market share in the global vegetable oil market.

Oil prices have fallen sharply from multi-month highs, and gold has fallen from a record high after US President Donald Trump appeared to back down on threats of potential US military intervention against Iran, dampening investor demand for safe-haven assets.

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

Tags: prices, Malaysia, palm oil