Malaysian palm oil futures experienced a significant decline on Monday, marking their lowest closing in over two weeks. This downturn was primarily driven by lackluster global demand and the softening of crude oil prices. Despite data indicating a tightening of inventories, traders remained unmoved by the market conditions. The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange closed down 80 ringgit, or 1.87%, to 4,202 ringgit ($879.63) per metric ton. This marked its lowest closing price since March 29.

Data from the Malaysian Palm Oil Board revealed a decline in Malaysia’s palm oil stocks at the end of March, dropping by 10.68% from the previous month to 1.71 million metric tons. Despite this decrease, a surge in exports overshadowed output, indicating a more complex market dynamic.

During the period, crude palm oil production increased by 10.57% to 1.39 million tons, while palm oil exports saw a notable uptick of 28.61% to 1.32 million tons. However, the anticipated smaller production in April, attributed to slower harvesting during Ramadan and Eid al-Fitr holidays, is expected to further deplete inventories.

Exports from Malaysia for April 1-15 showed promising growth, rising by 9.2% to 633,680 metric tons compared to the same period in March. Cargo surveyors Intertek Testing Services and Amspec Agri Malaysia reported increases of 9.2% and 28.5%, respectively, further underlining the resilience of Malaysia’s palm oil industry.

The decline in oil prices by approximately 1% on Monday contributed to the challenges faced by palm oil futures. With the market downplaying the risk of broader regional conflicts following Iran’s weekend attack on Israel, weaker crude oil futures rendered palm oil less attractive as a biodiesel feedstock.

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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.