Palm oil fell on Tuesday as crude oil and soybean oil prices declined

Malaysian palm oil futures extended losses for a second consecutive session on July 28, pressured by weaker crude oil prices and lower soybean oil prices. However, strong export demand helped limit the decline.

The benchmark October palm oil contract on the Bursa Malaysia Derivatives Exchange fell by 30 ringgit, or 0.64%, to 4,643 ringgit ($1,136) per ton. Over the past two trading sessions, the contract has lost 1.67%. According to Paramalingam Supramaniam, Director of brokerage firm Pelindung Bestari, the market came under pressure as crude oil and Chicago soybean oil prices weakened.

At the same time, Malaysia’s export performance remained encouraging. Cargo surveyors estimated that exports of Malaysian palm oil products during July 1–25 increased by 8.1% to 15.9% compared with the previous month, while production has risen only modestly so far. Market participants believe this should continue to support demand in the near term.

Additional pressure came from declines in other vegetable oil markets. The most-active soybean oil contract on the Dalian Exchange fell 1.21%, while its palm oil contract lost 1.22%. Chicago Board of Trade soybean oil futures were down 1.05%. Palm oil prices typically track competing vegetable oils as they compete for market share in the global edible oils market.

Lower global crude oil prices also weighed on sentiment, falling to their lowest level in more than a week amid expectations of easing tensions between the United States and Iran. Cheaper crude reduces the attractiveness of palm oil as a feedstock for biodiesel production. Meanwhile, a slight weakening of the Malaysian ringgit against the U.S. dollar made the country’s palm oil somewhat more competitive for overseas buyers.