Palm oil prices fell on Tuesday

Palm oil prices fell amid weakness in soybean oil on the Chicago Mercantile Exchange and falling oil prices, said David Ng, a Kuala Lumpur-based trader at Iceberg X. He added that market sentiment was also impacted by the recent weakening of Malaysian exports. Ng expects palm oil futures to encounter resistance at 4,650 ringgit per tonne and find support at 4,480 ringgit per tonne.

Malaysian palm oil futures closed at their lowest in two weeks on Tuesday, reversing the previous session’s gains, as weak export demand continues to weigh on the market.

The benchmark FCPO palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange fell 48 ringgit, or 1.05%, to 4,527 ringgit (US$1,115.57) per metric tonne, its lowest closing price since May 26.

The market remains tense, caught between weak demand and barely visible signs of a production recovery in June, said Paramalingam Supramaniam, director of brokerage Pelindung Bestari.

“The weaker ringgit, while providing some relief, will not be able to serve as a long-term shock absorber, as real demand must emerge before the market enters peak production months in the third quarter,” he added.

The ringgit strengthened 0.29% against the dollar on Tuesday after weakening to its lowest level since January 13 in the previous session.

Malaysian palm oil exports fell by 8.8% to 15.5% in May compared to the previous month, according to cargo experts. The Malaysian Palm Oil Council is expected to release monthly supply and demand data on Wednesday.

The most actively traded Dalian soybean oil contract fell 0.85%, while the palm oil contract fell 1.3%. Soybean oil prices on the Chicago Mercantile Exchange fell 0.27%.

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

Oil prices also fell, erasing much of the previous session’s gains, after Iran and Israel announced they would cease hostilities following a call from US President Donald Trump, although both sides warned of the possibility of renewed hostilities.

Falling oil prices make palm oil a less attractive feedstock option for biodiesel production.

Tags: prices, palm oil