Malaysian palm oil futures fell on Thursday

Malaysian palm oil futures fell for the second straight session on Thursday, driven by weaker Chicago soybean oil prices, a stronger ringgit, and expectations of increased April production.

According to David Ng, a trader at Iceberg X in Kuala Lumpur, palm oil prices fell amid falling crude and soybean oil prices. He notes that news of a possible ceasefire in the Middle East conflict is driving down energy prices, which in turn is pushing down palm oil prices. Ng forecasts palm oil prices will hold above 4,480 ringgit per tonne, with resistance at 4,600 ringgit per tonne.

The benchmark FCPO1 palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange fell 41 ringgit, or 0.9%, to 4,538 ringgit (US$1,161.50) per metric tonne at the close.

Crude palm oil prices fell following the prolonged liquidation of soybean oil futures in Chicago, said Anilkumar Bagani, head of commodity research at Sunvin Group, a Mumbai-based brokerage.

“The strengthening of the Malaysian ringgit, increased production in April, and the narrowing of the palm oil discount to gasoil also weighed on prices,” he said, adding that a sharp drop in crude oil futures on Wednesday evening also contributed to the decline.

A Reuters poll conducted last Monday showed that Malaysia’s palm oil inventories and exports likely fell in April, while production is expected to rise sharply.

The Malaysian Palm Oil Council is expected to release monthly supply and demand data on May 11.

The most active Dalian soybean oil contract fell 1.08%, while the CPO1 palm oil contract fell 1.51%. Soybean oil prices on the Chicago Mercantile Exchange fell 0.56%.

Palm oil prices are tracking those of competing edible oils as it fights for share in the global vegetable oil market.

The ringgit strengthened 0.33% against the dollar, making the commodity more expensive for buyers holding foreign currencies.

Malaysian palm oil prices are likely to rise by around 12% to 5,200 ringgit (US$1,316) per tonne by mid-July as higher energy prices resulting from the US-Israeli war against Iran boost demand for biodiesel and tighten supply, analyst Dorab Mistry predicts.

Tags: prices, palm oil