Palm oil prices fell on Tuesday

Palm oil prices fell, likely due to profit-taking following the Lunar New Year holidays. Crude palm oil prices are likely to be capped by a stronger ringgit, the postponement of the mandatory use of B50 biodiesel in Indonesia, and rising inventories in Malaysia, IOI Corp. Bhd, a major palm oil player, said after releasing its second-quarter financial results. However, the company noted that crude palm oil prices could remain above MYR4,000 per tonne for the next three months, and that the premium of soybean oil over palm oil could support demand.

On Tuesday, Malaysian palm oil futures fell for a third straight session, weighed down by a stronger ringgit and cargo inspection data indicating weak exports.

The benchmark FCPO1 palm oil contract for May delivery on Bursa Malaysia fell 29 ringgit, or 0.71%, to 4,054 ringgit (US$1,042.16) per metric tonne by midday.

“The market is looking for a new direction, and there’s little news to change it,” said Paramalingam Supramaniam, director of Selangor-based brokerage Pelindung Bestari, adding that a strong ringgit and weak export data are weighing on prices.

According to cargo testing firms Intertek Testing Services and AmSpec Agri Malaysia, Malaysian palm oil exports from February 1-20 are estimated to have declined by 8.9% to 12.6% month-on-month.

The ringgit weakened 0.05% against the dollar, but still held at its highest level since April 2018.

The Malaysian Palm Oil Council said on Tuesday that crude palm oil prices in March are expected to fluctuate between 4,000 and 4,300 ringgit (US$1,026-1,103) per metric ton, as tightening supplies, improving demand from India, the largest buyer, and resilient US soybean oil prices will support palm oil prices.

The most actively traded Dalian soybean oil contract rose 0.97%, while the palm oil contract rose 0.85%. Soybean oil prices on the Chicago Mercantile Exchange were unchanged.

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

Palm oil prices may again reach their peak of RM4,156 per tonne on February 20, which could be supported by a surge in growth.

Tags: prices, palm oil