Palm oil futures closed lower on Thursday
Palm oil futures closed lower, fueled by an overnight drop in competing soybean oil prices and likely profit-taking, Kenanga Futures analysts noted in a note. They added that concerns about declining demand and expectations of increased production in the coming weeks also likely weighed on prices. Kenanga Futures set support and resistance levels for the July contract at 4,540 ringgit per metric tonne and 4,660 ringgit per tonne, respectively.
Malaysian palm oil futures closed lower on Thursday after three consecutive sessions of gains, as lower Dalian palm oil prices triggered profit-taking.
The benchmark FCPO1 palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange lost 49 ringgit, or 1.06%, to close at 4,579 ringgit (US$1,155.44) per metric tonne.
“Futures traded lower today due to profit-taking, reflecting similar sentiment in Dalian palm oil futures during Asian hours today and Chicago soybean oil futures on Wednesday night,” said Anilkumar Bagani, head of commodity research at Mumbai-based brokerage Sunvin Group.
The most-active Dalian soybean oil contract rose 0.09%, while the CPO1 palm oil contract fell 0.05%. Soybean oil prices on the Chicago Mercantile Exchange fell 0.2%.
Palm oil tracks the price dynamics of competing edible oils as it competes for share in the global vegetable oil market.
Furthermore, Indonesia’s allocation to the B50 standard will provide insight into the increased consumption of palm oil in biofuels, Bagani said.
Starting July 1, Indonesia will increase the mandatory palm oil content in biodiesel from the current 40% to 50%, or the B50 standard, with the remainder consisting of conventional diesel. This program is part of the government’s strategy to reduce dependence on expensive fuel imports.
Oil prices continued to rise on Thursday, rising more than $1 apiece amid stalled peace talks between Iran and the US and ongoing restrictions on trade through the Strait of Hormuz.
Stronger oil futures make palm oil a more attractive biodiesel feedstock option.
The ringgit weakened 0.3% against the dollar, making the commodity cheaper for buyers holding foreign currency.
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