Malaysian palm oil futures fell to their lowest in more than two months on Thursday

Palm oil prices fell amid weakening soybean oil prices and expectations of rising inventories, which will likely weigh on price sentiment, according to David Ng, a trader at Iceberg X in Kuala Lumpur. Ng forecasts that crude palm oil prices will find support above 4,350 ringgit per tonne and resistance at 4,500 ringgit per tonne.

On Thursday, Malaysian palm oil futures fell to their lowest level in more than two months, as continued uncertainty over Indonesia’s mandatory use of biodiesel and expectations of lower export duties weighed on the market.

The benchmark FCPO1 palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange fell 42 ringgit, or 0.95%, to 4,396 ringgit (US$1,118.58) per metric tonne, its lowest closing price since March 6.

According to Anilkumar Bagani, head of commodity research at Sunvin Group, a Mumbai-based brokerage, several key issues remain unclear regarding the biofuel blending program, which includes 50% palm oil-based fuels announced in April and scheduled to launch on July 1.

This includes the distribution of funds for subsidized and non-subsidized participants, as well as the total volume, which will determine additional palm oil consumption for biofuels.

According to Bagani, the likelihood of Indonesia cutting palm oil export duties in June also put pressure on prices.

“The possibility of India raising tariffs on vegetable oil imports to curb the outflow of the US dollar is also being discussed,” he said.

Last week, Indian Prime Minister Narendra Modi urged families to reduce their consumption of cooking oil as a sharp rise in global energy prices following the Iran war put pressure on the country’s foreign exchange reserves.

The most actively traded soybean oil contract in Dalian fell 0.51%, while the palm oil contract fell 1.47%. Soybean oil prices on the Chicago Mercantile Exchange fell 0.62%.

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

Oil prices rose slightly, as market participants focused on the meeting between US President Donald Trump and Chinese President Xi Jinping to try to make progress on resolving the Iran war.

Higher oil futures prices make palm oil a more attractive feedstock option for biodiesel production.

The ringgit weakened by 0.05% against the dollar, making the commodity slightly cheaper for buyers with foreign currency.

Tags: palm oil, prices