Malaysian palm oil futures fell on Thursday

Palm oil exports to Malaysia have declined amid weak demand. AmSpec Agri Malaysia, a cargo valuation firm, estimates that Malaysia’s palm oil exports for the period from February 1 to 25 will fall 16% compared to the previous month to 922,649 metric tons. However, as Kenanga Futures noted in a research note, expectations of a sharper decline in Malaysian production this month could contribute to supply tightening and the reduction of elevated inventories. Several Malaysian palm oil plantations reported earnings this week, with KL Kepong expecting crude palm oil prices to fluctuate in the range of 4,000-4,300 ringgit per tonne for the January-March period.

Malaysian palm oil futures fell on Thursday, weighed down by weaker oil prices in the Dalian and Chicago markets, as well as sluggish exports, while a stronger ringgit also added to the pressure.

The benchmark FCPO1 palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange fell 48 ringgit, or 1.18%, to close at 4,005 ringgit (US$1,031.68) per metric tonne.

“Today’s crude palm oil futures are following the weakening Dalian… the ringgit is also putting pressure on prices,” a Kuala Lumpur-based trader said.

The most actively traded Dalian soybean oil contract fell 0.1%, while the palm oil contract fell 1.51%. Soybean oil prices on the Chicago Mercantile Exchange fell 0.74%.

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

The Malaysian ringgit, the contract currency for trade, strengthened 0.13% against the US dollar, hovering near its highest level since April 2018.

The strengthening ringgit makes palm oil more expensive for foreign currency holders.

According to independent inspection company AmSpec Agri Malaysia, Malaysian palm oil exports fell 16.1% from the previous month between February 1 and 25. Data from Intertek Testing Services showed a 12.1% decline.

According to Reuters technical analyst Wang Tao, palm oil prices could break the 4,036 ringgit per tonne support level and fall to a range of 3,999-4,012 ringgit.

Tags: prices, palm oil