Malaysian palm oil futures fell to a two-month low on Wednesday
Palm oil prices fell during the Asian trading session. According to a research note from Kenanga Futures, price gains may be capped by concerns about rising inventories in Malaysia and an uncertain demand outlook, despite ongoing tensions in the Middle East supporting oil prices.
Malaysian palm oil futures fell to a two-month low on Wednesday, weighed down by weak demand from key buyers.
The benchmark FCPO1 palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange fell 41 ringgit, or 0.91%, to 4,440 ringgit (US$1,130.35) per metric tonne, the lowest closing price since March 10.
The market is concerned about a lack of demand from key buyers, India and China, said Paramalingam Supramaniam, director of brokerage Pelindung Bestari. “Indian buyers have largely switched to soybean oil from Argentina, while China has reduced near-term purchases and is showing greater interest in forward purchases, especially for December delivery,” he said. This has created a demand vacuum in the short-term market, he added.
India’s palm oil imports fell 26% in April to their lowest in four months, as weak institutional demand and rising prices, which narrowed the price differential between palm oil and competing oils, discouraged processors from increasing purchases, according to the Mumbai-based Vegetable Oil Refiners Association of India.
The most-active Dalian soybean oil contract fell 0.04%, while the CPO1 palm oil contract fell 1.28%. Soybean oil prices on the Chicago Mercantile Exchange rose 0.11%.
Palm oil prices are tracking the price movements of competing edible oils as it battles for share in the global vegetable oil market.
Oil prices fell, ending a three-day rally, as investors awaited developments in the fragile Middle East truce and prepared for a key summit in Beijing between US President Donald Trump and Chinese President Xi Jinping.
Weaker oil futures are making palm oil a less attractive option for biodiesel feedstock.
The ringgit strengthened 0.1% against the dollar, making the commodity more expensive for buyers holding foreign currency.
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