Palm Oil Slumps For Third day, As Weakening In Oilseeds And Rival Oils

SINGAPORE:As the oilseed tracked weakness in the prices of rival vegetable oils Malaysian palm oil futures fell on Wednesday, extending losses to a third consecutive session.

By midday, the benchmark palm oil contract for delivery in May on the Bursa Malaysia Derivatives Exchange had dropped 10 ringgit, or 0.24 percent, to 4,195 ringgit, which is equivalent to $928.10.

Earlier in the session, the benchmark contract fell to 4,109 ringgit, its lowest level since February 17.

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Dalian’s most active soyoil contract decreased by 1.22 percent, while its palm oil contract decreased by 1.85 percent due to profit-taking and weaker rival oils. On the Chicago Board of Trade, soyoil prices were up 0.94 percent.

As they compete for a share of the global market for vegetable oils, palm oil is affected by changes in the prices of related  oilseed and rival oils.

According to analyst firm Oil World’s Thomas Mielke, palm oil prices will rise in the second half of 2023 as supplies tighten, and free-on-board prices for refined bleached deodorized (RBD) palm olein could reach $1,150 per tonne.

According to Nazrul Mansor, chief executive of FGV Holdings, the largest palm oil producer in the country, on Tuesday, if the El Nino weather pattern develops in the second half of the year, as forecast by some weather agencies, Malaysia’s palm oil output in 2023 could be lower than anticipated.

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According to Ahmad Parveez Ghulam Kadir, director general of industry regulator the Malaysian Palm Oil Board (MPOB), Malaysia’s palm oil stocks could fall below 2 million tonnes by the end of April, which would be the lowest level since July. This is due to an increase in exports following Indonesia’s restriction on sales abroad.

Carl Bek-Nielsen, co-chairman of the Roundtable on Sustainable Palm Oil, stated on Tuesday that in order to overcome stagnant yields and maintain the country’s competitiveness as the world’s second-largest producer, palm oil companies in Malaysia must replant its vast acreage of old, unproductive palm oil trees.

According to Reuters technical analyst Wang Tao, palm oil may fall more into the range of 4,081 to 4,112 ringgit per tonne due to strong momentum.