Palm oil prices fell to a two-week low
Palm oil futures closed lower, following a drop in crude oil prices following the US-Iran ceasefire announcement. Weakness in competing edible oils following the announcement also weighed on palm oil prices, Kenanga Futures said in a note. The ceasefire likely eased concerns about supply disruptions, mitigating inflation fears and reducing pressure on central banks to maintain tight monetary policy longer, they added. Analysts are setting support for the June palm oil futures contract at 4,650 ringgit and resistance at 4,800 ringgit per metric tonne.
On Wednesday, Malaysian palm oil futures fell more than 3%, hitting their lowest level in two weeks, as a sharp drop in oil prices following the US-Iran ceasefire agreement weighed on the market.
The benchmark FCPO1 palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange closed down 179 ringgit, or 3.76%, at 4,586 ringgit (US$1,154) per metric tonne, its lowest level since March 26.
Palm oil markets are currently closely monitoring the developments in the Middle East, reflecting fluctuations in oil prices, said Sandeep Singh, director of Kuala Lumpur-based consultancy and trading firm The Farm Trade.
Oil prices fell below $100 per barrel after US President Donald Trump announced an agreement with Iran on a two-week ceasefire, conditional on the immediate and safe opening of the Strait of Hormuz.
Falling oil futures prices are making palm oil a less attractive biodiesel feedstock option.
Singh stated that palm oil prices are expected to find support around RM4,500, supported by the possible introduction of mandatory biodiesel use in Malaysia and declining inventory levels.
The Minister of Plantations and Commodities stated that Malaysia plans to gradually expand its palm oil-based biodiesel production program nationwide, given palm oil’s price sensitivity to petroleum product prices.
The most actively traded soybean oil contract in Dalian fell 3.07%, while the palm oil contract fell 4.36%. Soybean oil prices on the Chicago Mercantile Exchange fell 3.28%.
Palm oil prices are tracking those of competing edible oils as it competes for market share in the global vegetable oil market.
The ringgit strengthened 1.34% against the dollar, making the commodity more expensive for buyers holding foreign currency.
The Indonesian Ministry of Energy issued a ministerial decree setting the timeline for the implementation of a program to incorporate biofuels into fuel mixes, an official said, as the country strives to achieve its energy transition and self-sufficiency goals.
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