Malaysian Palm Oil Futures Decline Amidst Global Concerns
Malaysian palm oil futures witnessed a downturn for the second consecutive session, reaching a two-week closing low on Wednesday, following a trend observed in other competing oils.The benchmark palm oil contract for June delivery, listed on the Bursa Malaysia Derivatives Exchange, observed a decrease of 101 ringgit, equivalent to 2.38%, settling at 4,135 ringgit ($874.39) per metric ton during the closing session. This marked the lowest closing figure since March 13.
| CPO FUTURES PRICES IN RINGGIT | |||||
| Month | Last | Open | Change | High | Low |
| Apr’24 | 4251 | 4330 | -81 | 4338 | 4250 |
| May’24 | 4203 | 4298 | -94 | 4301 | 4200 |
| Jun’24 | 4131 | 4238 | -105 | 4238 | 4128 |
| Jul’24 | 4043 | 4145 | -103 | 4145 | 4040 |
| BY TEAM ABDUL HAMEED | |||||
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Influence of Rival Oils
The decline in palm oil prices to the softer performance of rival oils. The prevailing discounts of soft oils in comparison to crude palm oil have raised concerns regarding exports for key producers such as Malaysia and Indonesia.
- Performance of Competing Oils
On the Dalian Commodity Exchange, the soyoil contract experienced a decline of 2.14%, whereas its palm oil counterpart lost 2.38%. Similarly, soyoil prices on the Chicago Board of Trade witnessed a decrease of 1.53%.
Factors Affecting Soybean and Corn Futures
The decline in soybean and corn futures can be attributed to ample supply in the market. Furthermore, anticipation regarding U.S. planting and grain stocks data, scheduled for release on Thursday, is influencing market sentiments.
- Impact of Crude Oil Market Trends
Crude oil futures also experienced a decline for the second consecutive day, plummeting by over 1% on Wednesday due to the surge in U.S. stockpiles. Additionally, indications suggest that the OPEC+ producer group is unlikely to alter its output policy at an upcoming meeting, further affecting oil prices. The decrease in crude oil futures renders palm oil a less appealing option for biodiesel feedstock.
Market Projections
Fitch Ratings, in its assessment on Wednesday, projected a weakening of Malaysian benchmark crude palm oil prices from the second quarter of the year. This projection is based on the expectation of higher vegetable oil supply globally. Additionally, favorable weather conditions and reduced fertilizer costs are anticipated to bolster output growth, exerting sustained pressure on prices over the next 12-18 months.
In conclusion, Malaysian palm oil futures underscores the intricate interplay of various factors within the global market. While softer rival oils and ample supply exert downward pressure on prices, anticipation regarding key data releases and the trajectory of crude oil futures further contribute to market volatility. So we are predicting that’s market will moves Neutral To Slightly Bearish Position due to narrow gap between rival soft edibles oils, it may hovering in the range of MYR3,700 to MYR4,300 per ton.
