Palm oil prices remained little changed on Thursday

Palm oil prices were little changed during the Asian trading session on Thursday, likely due to a decline in soybean oil prices the previous day amid continued progress in the US-Iran peace agreement. Analysts at Kenanga Futures point to possible profit-taking following the recent rally. The price decline may have been mitigated by strong June export data and concerns about production prospects due to El Niño-related weather, they add.

Malaysian palm oil futures closed slightly lower on Thursday, following a decline in crude oil prices and those of rival vegetable oil producers such as Dalian and Chicago.

The benchmark FCPO3 palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange fell 1 ringgit, or 0.02%, to 4,573 ringgit (US$1,111.30) per metric tonne at the close.

“Futures are following the weakness in crude oil, soybean oil, and the Dalian market today,” said a Kuala Lumpur-based trader.

The most actively traded Dalian soybean oil contract, DBY1, fell 0.3%, while the palm oil contract declined 0.68%. Soybean oil prices on the Chicago Mercantile Exchange fell 1.98%.

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

Oil prices fell 2% on Thursday to their lowest level since the first trading day of the war with Iran, as a temporary agreement between the US and Iran to end the war, reopen the Strait of Hormuz, and ease sanctions against Tehran improved global supply prospects.

Lower crude oil futures prices make palm oil a less attractive option for biodiesel production.

Indonesia plans to mandate the use of B50 biodiesel—a blend of 50% palm oil-based biodiesel and 50% conventional diesel—from July 1, Energy Minister Bahlil Lahadalia announced Thursday after fuel tests showed positive results.

The ringgit weakened 1.23% against the dollar, making the commodity cheaper for buyers holding foreign currency.

Tags: prices, palm oil