Price of palm oil fell on Wednesday

As Kenanga Futures analysts noted in their commentary, the price of the commodity was pressured by weakening prices of competing vegetable oils the previous day. The easing of geopolitical tensions in the Middle East continued to weigh on the entire oil industry, while lower oil prices reduced the competitiveness of palm oil as a biofuel feedstock. However, the losses should be mitigated by expectations of strong demand ahead of religious holidays in India. Kenanga sees support for the September futures contract at 4,560 ringgit and resistance at 4,700 ringgit.

Malaysian palm oil futures fell for the second consecutive session on Wednesday, following a decline in prices of competing edible oils on the Chicago and Dalian exchanges.

The benchmark FCPO3 palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange fell 26 ringgit, or 0.56%, to 4,632 ringgit (US$1,120.19) per tonne at the close of trading.

The contract fluctuated within a narrow range between 4,622 and 4,690 ringgit per tonne throughout the day.

“The market is likely to remain within the target range, following muted price movements in competing vegetable oils and in the energy market,” said a Kuala Lumpur-based trader.

The most actively traded Dalian soybean oil contract rose 0.37%, while soybean oil prices on the Chicago Mercantile Exchange fell 0.42%. The most active palm oil contract on the Dalian Exchange fell 0.46%.

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

On Wednesday, oil prices fell more than 1%, extending this week’s decline and trading near four-month lows, amid signs that more oil tankers are preparing to leave the Strait of Hormuz.

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

According to Reuters technical analyst Wang Tao, palm oil prices could decline to a range of 4,574 to 4,606 ringgit per metric tonne.

Tags: prices, palm oil