Palm oil prices fell on Tuesday

Malaysia’s palm oil exports in January rose 11% from the previous month to 1.48 million metric tons, the Malaysian Palm Oil Board reported.

Palm oil prices fell following the release of key data from the Malaysian Palm Oil Board (MPOB) on Tuesday, while weaker prices for competing edible oils in the Dalian and Chicago markets also weighed on investor sentiment.

Palm oil prices fell after data from cargo appraiser AmSpec Agri Malaysia showed that exports for the period from February 1 to 10 fell more than 14% compared to the previous month. Expectations of weaker demand in the coming weeks likely weighed on market sentiment, pushing palm oil prices lower, said David Ng, a trader at Iceberg X in Kuala Lumpur. He added that palm oil’s price competitiveness relative to other vegetable oils is also declining. Ng sees support above MYR4,050, with resistance at MYR4,300.

The benchmark April palm oil contract FCPO1 on the Bursa Malaysia Derivatives Exchange fell MYR63, or 1.51%, to MYR4,097 (US$1,044.89) per metric tonne at the close.

Data show that Malaysian palm oil inventories fell 7.72% in January, the first time in 11 months, driven by a sharp rise in exports despite production falling to a ten-month low.

Malaysian palm oil exports from February 1 to 10 fell 14.3% to 399,995 tonnes, compared with 466,457 tonnes shipped from January 1 to 10, independent inspection company AmSpec Agri Malaysia reported on Tuesday.

The most actively traded Dalian soybean oil contract fell 0.3%, while the palm oil contract fell 0.69%. Soybean oil prices on the Chicago Mercantile Exchange fell 0.64%.

Palm oil prices follow those of competing edible oils as it battles for share in the global vegetable oil market.

Malaysia’s aging oil palm plantations are expected to expand from the current 1.7 million hectares to 2 million hectares (4.94 million acres) by 2027, putting pressure on output at the world’s second-largest producer.

Meanwhile, according to an official, the Indonesian Plantation Development Fund (BPDP) has so far distributed Rp 10.89 trillion (US$648.60 million) from a fund aimed at encouraging smallholder palm oil producers to replant and improve yields.

Analysts said Monday that Indian palm oil demand should recover this year thanks to lower prices, although competition from Chinese soybean oil, an alternative product, will limit growth.

Traders and analysts predict that China’s demand for palm oil is expected to continue to decline this year as the country switches to cheaper alternatives made from rapeseed and soybeans.

Tags: prices, palm oil