Palm oil prices fall amid weak exports

According to cargo valuation firm AmSpec Agri Malaysia, Malaysia’s palm oil exports fell by 17% from the previous month between April 1 and 25. However, as Tongguan Jinyuan Futures notes in a research note, stalled peace talks between the US and Iran are increasing uncertainty around the Strait of Hormuz, supporting energy and biofuel prices. Continued demand for biofuels, as Indonesia moves forward with its B50 biodiesel policy, could also support palm oil prices.

Malaysian palm oil futures fell more than 1% on Monday, driven by sluggish demand in key markets amid rising production.

The benchmark FCPO1 palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange fell 62 ringgit, or 1.35%, to 4,535 ringgit (US$1,148.10) per metric tonne at the close. The contract had risen 0.39% in the previous session.

A decline in Malaysian palm oil export figures, coupled with the forecast for increased production in April, led to a drop in palm oil prices, said Anilkumar Bagani, head of commodity research at Sunvin Group, a Mumbai-based brokerage.

“Buying in target countries has been very weak, with the exception of some purchases from China last week, but this has failed to support palm oil prices in the long term,” he said.

According to cargo experts, Malaysian palm oil exports from April 1 to 25 fell by 15.7-16.8% compared to the previous month.

The active Dalian soybean oil contract fell by 0.45%, while the CPO1 palm oil contract fell by 0.05%. Soybean oil prices on the Chicago Mercantile Exchange rose by 0.04%.

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

Oil prices jumped nearly 3% as peace talks between the US and Iran stalled and shipments through the Strait of Hormuz remain limited, leading to a global oil shortage.

Stronger crude oil futures make palm oil a more attractive option for biodiesel feedstock.

The ringgit strengthened 0.3% against the dollar, making the commodity more expensive for buyers holding foreign currency.

Tags: prices, palm oil