Palm oil prices fell slightly on Thursday

Palm oil prices have eased slightly amid concerns about production growth in the coming weeks, says David Ng, a trader at Iceberg X in Kuala Lumpur. However, he believes high oil prices will continue to support sentiment for this edible oil in the short term. Higher oil prices could increase palm oil’s appeal as a biofuel alternative, supporting its price. Ng expects palm oil prices to find support at 4,450 ringgit per tonne and face resistance at 4,550 ringgit per tonne.

Malaysian palm oil futures were little changed on Thursday amid subdued demand from major importers India and China, rising expectations for increased production, and a stronger ringgit.

The benchmark FCPO1 palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange fell 2 ringgit, or 0.04%, to 4,495 ringgit (US$1,137.40) per metric tonne at the close.

Demand remains a concern, particularly from key importers India and China, where buying interest remains subdued despite expected production improvements in the second quarter, said Paramalingam Supramaniam, director of brokerage Pelindung Bestari.

“The strength of the ringgit is also adding pressure. Combined, these factors will limit market growth, as increased production combined with weak demand will likely lead to an accumulation of ending stocks,” he said.

According to cargo valuation experts, Malaysian palm oil exports from April 1 to 15 fell by 34.2% to 34.7% month-on-month. The ringgit weakened 0.05% against the US dollar, but has strengthened 0.20% since Monday. The stronger ringgit makes palm oil more expensive for holders of other currencies.

Oil prices rose on Thursday, reversing earlier declines, as the market cast doubt on the possibility of peace talks between the US and Iran ending the war that has led to unprecedented energy supply disruptions in the Middle East.

Strengthening crude oil futures makes palm oil a more attractive option for biodiesel feedstock. The most active Dalian soybean oil contract rose 0.57%, while the CPO1 palm oil contract rose 0.32%. Soybean oil prices on the Chicago Mercantile Exchange rose 0.82%.

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

Tags: prices, palm oil