Malaysian palm oil futures were little changed on Wednesday

Competing oils traded lower yesterday as slow progress in resolving the US-Iran conflict weighed on sentiment, Kenanga Futures analysts noted in a note. Profit-taking following recent gains and concerns about a possible Indian import tariff hike likely also weighed on prices, although a weaker Malaysian ringgit could soften the decline. They set support and resistance levels for the August contract at 4,500 and 4,625 ringgit, respectively.

Malaysian palm oil futures were little changed on Wednesday, as concerns that Indonesia’s plan to establish a state-run commodity export management agency could lead to supply curbs were offset by weak export data.

The August palm oil contract on the Bursa Malaysia Derivatives Exchange fell 2 ringgit, or 0.04%, to 4,583 ringgit (US$1,154.99) per metric tonne at the close.

Indonesian President Prabowo Subianto told parliament on Wednesday that a state-owned company will be established to manage the export of natural resources, including palm oil, coal, and ferroalloys.

This move by Indonesia is expected to support the market and ensure its resilience, as the likelihood of aggressive selling remains low, given the possibility that buyers may redirect their demand to Malaysia, said Paramalingam Supramaniam, director of brokerage Pelindung Bestari.

“Buyers’ attention may shift to Malaysia until more is known about how the mechanism implemented in Indonesia will work,” he said.

According to shipping experts, Malaysian palm oil exports from May 1 to 20 fell by 13.9% to 20.5% compared to the previous month.

The most active Dalian soybean oil contract rose 1.31%, while the CPO1 palm oil contract added 1.44%. Soybean oil prices on the Chicago Mercantile Exchange rose 0.24%.

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

Oil prices fell by about 1% after US President Donald Trump reiterated that the war with Iran will end “very quickly,” although investors remain wary of the outcome of peace talks as supply disruptions from the Middle East continue.

Weaker oil futures make palm oil a less attractive option for biodiesel feedstock.

The ringgit strengthened 0.18% against the dollar, making the commodity slightly more expensive for buyers holding foreign currency.

Malaysian palm oil producers are reducing the volume of replanting as rising fertilizer and fuel costs, coupled with rising vegetable oil prices, prompt farmers to postpone this crucial crop, which is crucial for maintaining supplies of the world’s most widely used edible oil.

Tags: prices, palm oil