Palm falls on softer crude, rival oils and rising stocks

JAKARTA/KUALA LUMPUR: Malaysian palm oil futures declined for the second straight session on Wednesday to their lowest in more than two weeks, dragged by weaker rival edible oils, softening crude oil prices and rising May-end stocks.

The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange slid 28 ringgit, or 0.72%, to 3,836 ringgit ($905.36) a metric ton by the midday break.

“Slow growth in export demand amidst high stock levels may remain, pressuring prices and dampening market sentiment,” a Kuala Lumpur-based trader said.

Malaysia’s palm oil stocks jumped to their highest level in eight months in May as a surge in production and imports countered exports, which hit their highest in six months, data from the Malaysia Palm Oil Board (MPOB) showed.

Cargo surveyors estimated exports of Malaysian palm oil products during June 1-10 to have risen between 8.1% and 26.4% month-on-month.

European Union palm oil imports for the 2024-25 season that began in July dropped 19% to 2.69 million tons by June 8, the European Commission data showed.

Demand for palm oil from India and China is expected to increase in the coming months as recent price corrections provide attractive entry points for the big buyers, an industry expert said.

Dalian’s most-active soyoil contract fell 0.82%, while its palm oil contract shed 2.13%.

Soyoil on the Chicago Board of Trade (CBOT) lost 0.21%.

Malaysian palm oil range-bound ahead of MPOB data, export estimates

Palm oil tracks the price movements of rival edible oils as it competes for a share of the global vegetable oils market.

Oil prices softened in Asian trade on Wednesday as markets were assessing the outcome of the US-China trade talks, yet to be reviewed by the countries’ presidents, with weak oil demand from China and OPEC+ production increases weighing on the market.

Weaker crude oil futures make palm a less attractive option for biodiesel feedstock. The ringgit, palm’s currency of trade, weakened 0.09% against the dollar, making the commodity slightly cheaper for buyers holding foreign currencies.

Palm oil may test a resistance level of 3,889 ringgit per metric ton, a break above which could lead to a gain of up to 3,925 ringgit, Reuters technical analyst Wang Tao said.