Malaysian Palm Oil Futures Decline Amidst Global Concerns
Palm oil market futures experienced a significant uptrend for third consecutive session on Tuesday. This surge was propelled by short coverings and the robust performance of Chicago soyoil, following a period of sideways trading earlier in the day.The benchmark palm oil contract for June delivery on the BMD Exchange saw a notable increase, gaining 41 ringgit, equivalent to 0.96%, closing at 4,308 ringgit ($906.57) per metric ton.
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CPO FUTURES PRICES IN RINGGIT |
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| Month | Last | Open | Change | High | Low |
| Apr’24 | 4462 | 4395 | 44 | 4467 | 4384 |
| May’24 | 4392 | 4327 | 56 | 4404 | 4297 |
| Jun’24 | 4308 | 4260 | 41 | 4324 | 4224 |
| Jul’24 | 4228 | 4177 | 42 | 4241 | 4140 |
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BY TEAM ABDUL HAMEED |
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Click Here To View March 26, 2024 Report
Factors Driving the Upsurge
- Short Coverings and Market Dynamics
A trader based in Kuala Lumpur reported that the contract’s ascent during the afternoon session was primarily attributed to short covering. Notably, prices had been resiliently holding at the 4,250 ringgit levels during the second session, indicating bullish market sentiment.
- External Influences
The strength observed in Chicago soyoil and West Texas Intermediate (WTI) crude oil, coupled with a weakened ringgit, further bolstered the palm oil contract’s performance. Notably, the surge in crude oil prices renders palm oil more appealing as a biodiesel feedstock.
Market Insights and Trends
- Decline in Palm Oil Imports
In March, India’s Palm oil market imports witnessed a notable decline, hitting a ten-month low at 481,000 tons. Analysts attribute this downturn to India’s increased imports of sunflower oil, Rising Export Figures
Contrary to the decline in imports, exports of Malaysian palm oil products surged in March. Cargo surveyors, including Intertek Testing Services, AmSpec Agri Malaysia, and Societe Generale de Surveillance (SGS), projected a substantial increase ranging between 11.77% and 29.2%.
- Interplay with Related Oils
The performance of palm oil is intricately linked to price movements in related oils, as they vie for market share within the global vegetable oils market. Notably, the soyoil contract on the Dalian Commodity Exchange and prices of soyoil on the Chicago Board of Trade experienced positive momentum, further influencing the palm oil market
In conclusion, Malaysian palm oil market reveals a delicate interplay of domestic and global factors. As, these uncertainties, a comprehensive understanding of the evolving dynamics for Palm trade in Neutral To Bullish Position due to narrow gap between rival soft edibles oils, it may hovering in the range of MYR4,000 to MYR4,500 per ton.
