Palm Oil Futures Decline Amid Production Expectations

JAKARTA: Malaysian palm oil futures experienced a decline for the fourth consecutive session on Thursday, settling at their lowest level since October 1. This downturn was influenced by anticipations of increased production, although robust prices of competing oils mitigated further losses.

The benchmark palm oil contract, scheduled for July delivery on the Bursa Malaysia Derivatives Exchange, decreased by 3 ringgit, or 0.07%, to close at 4,012 ringgit ($910.78) per metric ton.

Earlier in the session, the contract had seen an increase of up to 1.57%, mirroring the performance of rival vegetable oils and crude oil, before reversing its course.

Market Dynamics

According to a trader based in Kuala Lumpur, the market resumed its downward trajectory due to growing production levels and forecasts of diminished future exports resulting from prevailing market uncertainties, particularly after the closure of the Dalian market.

Dalian’s most active soyoil contract saw a rise of 0.83%, while its palm oil contract increased by 1.21%. Meanwhile, soyoil prices on the Chicago Board of Trade (CBOT) showed minimal change, edging up by 0.02%.

Palm oil’s price movements are correlated with those of competing edible oils, as they vie for a share of the global vegetable oils market.

Oil prices extended their gains, driven by expectations of tighter supply following the U.S.’s imposition of additional sanctions aimed at curbing Iranian oil trade and pledges from certain OPEC producers to implement further output reductions.

Elevated crude oil prices enhance palm oil’s attractiveness as a biodiesel feedstock.

In other news, Malaysia has upheld its May export tax for crude palm oil at 10% while reducing its reference price, as indicated by a circular published on the Malaysian Palm Oil Board website on Tuesday.

Estimates from cargo surveyor Intertek Testing Services and independent inspection firm AmSpec Agri Malaysia suggest that exports of Malaysian palm oil products for the period of April 1-15 have increased by 13.6% to 17% compared to the previous month.