Palm Oil Futures Decline on Production Expectations

KUALA LUMPUR: Malaysian palm oil futures experienced a downturn on Monday, influenced by projections of increased production and a weaker Chicago soyoil market.

The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange decreased by 2.37%, settling at 3,961 ringgit ($908.49) per metric ton at market close.

According to David Ng, a proprietary trader at Iceberg X Sdn Bhd in Kuala Lumpur, crude palm oil futures were impacted by the weak performance of Chicago soybean oil and anticipated higher output in the upcoming weeks.

Key levels to watch

“We foresee support at 3,900 ringgit and resistance at 4,080 ringgit,” Ng added.

The Malaysian Palm Oil Board is scheduled to release its supply and demand figures for April on May 13. A survey indicated that palm oil inventories likely saw their first rise in six months, with production increasing by an estimated 10.3% compared to the previous month.

Dalian’s most-active soyoil contract decreased by 1.54%, while its palm oil contract fell by 2.15%. Soyoil prices on the Chicago Board of Trade were down by 1.12%.

Palm oil prices often mirror the movements of competing edible oils, as they vie for market share in the global vegetable oils sector.

Oil prices remained stable as investors assessed uncertainty surrounding trade discussions between the U.S. and China, which has created ambiguity for global economic growth and fuel demand. Additionally, the potential for OPEC+ to increase supply is being considered.

Stronger crude oil futures typically enhance palm oil’s attractiveness as a biodiesel feedstock.

The ringgit, the currency in which palm oil is traded, strengthened by 0.23% against the dollar, making the commodity more expensive for international buyers.

Cargo surveyors estimate that exports of Malaysian palm oil products from April 1-25 increased between 13.8% and 14.8% compared to the same period last month.