Malaysian Palm Oil Futures Dip Amidst Rivalry in Edible Oils Market
Malaysian palm oil market witnessed a downward trend on Wednesday, marking the fourth consecutive session of decline and reaching their lowest closing point in six weeks. This dip was influenced by the competitive pricing of alternative edible oils, which exerted pressure on demand within the market. The benchmark palm oil contract for July delivery on the BMD Exchange experienced a decline of 1.52%, settling at 4,012 ringgit ($837.58) per metric ton.
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CPO FUTURES PRICES IN RINGGIT |
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|
Month |
Last |
Open |
Change |
High |
Low |
|
May’24 |
4158 |
4217 |
-56 |
4230 |
4115 |
|
Jun’24 |
4072 |
4137 |
-62 |
4151 |
4032 |
|
Jul’24 |
4014 |
4077 |
-60 |
4093 |
3974 |
|
Aug’24 |
3963 |
4019 |
-53 |
4033 |
3920 |
|
BY TEAM ABDUL HAMEED |
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Factors Contributing to the Decline
The latest USDA World Agricultural Supply and Demand Estimates (WASDE) report unveiled figures that leaned towards a bearish outlook.(as we predicted before) Consequently, this prompted funds to divest from existing positions and cultivate short interests across the grains and oilseed sectors.
- Influence of Rival Oils
The downward trajectory of Malaysian palm oil futures has been influenced by the performance of related oils in the market. For instance, Dalian’s most-active soyoil contract experienced a decline of 1.5%, while its palm oil contract eased by 2.4%. Similarly, These movements underscore the competitive landscape within the global vegetable oils market, where palm oil competes for market share against its counterparts.
Short Term Demand Boost
Despite the prevailing challenges, there is optimism regarding a potential uptick in demand in the short term. The current tightness observed in destination markets is likely to drive increased demand amidst the ongoing price adjustments.
Implications for Palm Oil
The broader context of the market includes the influence of external factors such as oil prices. On Wednesday,Additionally, weaker economic data from China and diminished prospects of interest rate cuts have contributed to apprehensions regarding global demand.The decline in crude oil futures has implications for palm oil as a biodiesel feedstock, rendering it a less attractive option under the prevailing market conditions.
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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 Bearish Position due to narrow gap between rival soft edibles oils, it may hovering in the range of MYR3,950 to MYR4,250 per ton.
