Palm oil prices closed lower on Monday
Palm oil prices closed lower, following overnight weakness in competing oils, Kenanga Futures analysts wrote in a note. Significant growth in Malaysian domestic production also weighed on sentiment, they noted, adding that expectations of stronger production growth in June also heightened supply concerns. Falling oil prices also added to pressure on the vegetable oil market, they added.
Malaysian palm oil futures fell on Monday, tracking prices of competing vegetable oils in the Chicago and Dalian markets, with oil prices also weighing on sentiment.
The benchmark FCPOc3 palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange fell 25 ringgit, or 0.56%, to 4,450 ringgit (US$1,099.31) per metric tonne at the close.
“After opening with a gap down, driven by a selloff in energy, Chicago Board of Trade soybean oil, and vegetable oil futures during today’s Asian hours, futures traded sideways,” said Anilkumar Bagani, head of research at Mumbai-based vegetable oil brokerage Sunvin Group.
The most-active Dalian soybean oil contract fell 0.29%, while the CPO1 palm oil contract fell 1.34%. Soybean oil prices on the Chicago Mercantile Exchange fell 1.76%.
Palm oil prices are tracking those of competing edible oils as they compete for share in the global vegetable oil market.
According to independent inspection company AmSpec Agri Malaysia, Malaysian palm exports increased by 23.8% between June 1 and 15, while cargo inspection company Intertek Testing Services reported a 9.6% increase.
Oil prices fell to a three-month low on Monday after US President Donald Trump and Iran’s deputy foreign minister announced a preliminary agreement to end the war and resume traffic through the Strait of Hormuz.
Weaker crude oil futures are making palm oil a less attractive option for biodiesel feedstock.
Malaysia lowered its July reference price for crude palm oil to a level that maintains the export duty at 10%, according to a circular on the Malaysian Palm Oil Council’s website on Monday.
India’s palm oil imports rose slightly in May, recovering from a four-month low, but remained below normal levels as refiners increased purchases of cheaper soybean oil after palm oil’s price advantage waned, a leading industry organization reported on Friday.
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