Malaysian Palm Oil Futures Decline Amidst Global Concerns
Malaysian palm oil futures experienced a downward trend for the third consecutive session on Monday, following a recent surge to a one-year high. This decline was influenced by the decrease in rival soybean oil prices, leading to profit booking activities. The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange closed at 4,298 ringgit ($905.03) per metric ton, marking a 1.04% decrease of 45 ringgit.
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CPO FUTURES PRICES IN RINGGIT |
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| Month | Last | Open | Change | High | Low |
| Apr’24 | 4518 | 4536 | -46 | 4540 | 4469 |
| May’24 | 4386 | 4425 | -37 | 4438 | 4340 |
| Jun’24 | 4298 | 4345 | -45 | 4360 | 4257 |
| Jul’24 | 4223 | 4270 | -50 | 4288 | 4183 |
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BY TEAM ABDUL HAMEED |
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Impact of Falling Stocks on Palm Oil Prices
While falling stocks had initially bolstered palm oil prices in recent weeks, the resulting rally caused its premium over soybean and sunflower oil to escalate. Consequently, palm oil buyers began shifting their preferences towards other oil alternatives, necessitating a price adjustment to prevent a potential decline in demand and exports in the forthcoming months.
Substitution Trends in Palm Oil Imports
In March, India’s palm oil imports plummeted to their lowest level in 10 months as buyers opted for the more cost-effective sunflower oil. Market observers are eagerly awaiting data on Malaysia’s March exports, production, and stock levels emphasized that data release in shaping market sentiments.
Expectations Regarding Malaysian Palm Oil Inventories
Forecasts suggest that Malaysia’s palm oil inventories are likely to witness a 6.65% decline from the previous month, reaching an eight-month low of 1.79 million tons by the end of March, according to a Reuters survey conducted on Thursday. The MPOB is scheduled to unveil this data on April 15.
Technical Analysis And External Market Factors
Technical analysis suggests that palm oil may potentially decline further into a range of 4,274 ringgit to 4,294 ringgit per metric ton. This projection is attributed to the completion of a five-wave cycle from 3,745 ringgit. Furthermore, the decline in oil prices by over $1 per barrel on Monday, with Brent sliding under $90 This decrease was fueled by easing tensions in the Middle East following Israel’s withdrawal of additional soldiers from southern Gaza.
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 Slightly Bearish Position due to narrow gap between rival soft edibles oils, it may hovering in the range of MYR4,000 to MYR4,400 per ton.
