Malaysian palm oil futures remained in a narrow range on Thursday

Malaysian palm oil futures fell more than 1% on Thursday as expectations of increased production weighed on the market, while export demand has yet to show a significant recovery.

The benchmark FCPO3 palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange fell 50 ringgit, or 1.1%, to 4,507 ringgit (US$1,105.47) per metric tonne at the close of trading.

There is currently no optimism in the market as production continues to increase, while exports remain sluggish and show no signs of recovery, said Paramalingam Supramaniam, director of brokerage Pelindung Bestari.

“As production rates increase, it is only a matter of time before selling pressure intensifies in the market.” For now, prices will remain rangebound as market participants await the Malaysian Palm Oil Board (MPOB) report.

Supramaniam added that a buildup of inventories appears inevitable.

The MPOB is expected to release its monthly supply and demand data on July 10.

The most actively traded Dalian soybean oil contract rose 0.21%, while the palm oil contract fell 0.97%. Soybean oil prices on the Chicago Mercantile Exchange fell 0.21%.

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

Oil prices fell for a third consecutive day as concerns about supply disruptions eased after Qatar announced progress in Iran-US talks over the Strait of Hormuz.

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

The ringgit strengthened 0.37% against the dollar, making the commodity slightly more expensive for buyers holding foreign currency.

According to five dealers, palm oil imports into India fell to their lowest in 14 months in June, as weakening demand and reduced discounts compared to competing oils prompted buyers to reduce purchases.

Tags: palm oil, prices