Palm Oil Futures Remain Steady Amid Mixed Signals

KUALA LUMPUR: Malaysian palm oil futures saw minimal movement on Thursday as market participants awaited stronger signals. Support from competitor vegetable oils provided some lift, but a strong ringgit and increased production served as counterweights.

The benchmark palm oil contract, set for July delivery on the Bursa Malaysia Derivatives Exchange, experienced a marginal decrease of 1 ringgit, or 0.02%, settling at 4,036 ringgit ($923.57) per metric ton at the close of trading.

During the session, the contract fluctuated between 4,005 ringgit and 4,054 ringgit a ton, following a closing price of 4,037 ringgit in the previous session.

Market Outlook

A Kuala Lumpur-based trader noted that crude palm oil futures were consolidating, influenced by positive demand news from India and rising production figures from the Malaysian Palm Oil Association. The market is currently awaiting further directional cues.

The trader also cautioned that rising production levels and a strengthening Malaysian ringgit, the currency used for trade, could potentially limit price increases.

The ringgit appreciated by 0.41% against the U.S. dollar on Thursday, which makes the contract less appealing for holders of foreign currencies.

Competitive Market

Dalian’s most active soyoil contract increased by 0.59%, while its palm oil contract rose by 0.98%. Soyoil prices on the Chicago Board of Trade (CBOT) also saw an increase of 0.62%.

Palm oil prices tend to mirror the price movements of other edible oils as it competes for market share in the global vegetable oil sector.

India has reportedly increased its palm oil purchases after a lull of five months, triggered by a price correction that made palm oil more competitive than soyoil. This encouraged refiners to place orders to restock their inventories, according to sources.

According to technical analysis, palm oil may retrace into a range of 3,929 ringgit to 3,968 ringgit per metric ton, after encountering resistance at 4,072 ringgit.