Malaysian Palm Oil Futures Decline Amidst Global Concerns
Malaysian palm oil futures witnessed a continuous decline, marking a fifth consecutive session drop on Thursday. The downward trend was influenced by anticipations of increased production and a slowdown in demand The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange closed down by 23 ringgit or 0.57%, settling at 3,989 ringgit ($834.34) per metric ton. This decline represents its most significant falling streak since early December.
|
CPO FUTURES PRICES IN RINGGIT |
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|
Month |
Last |
Open |
Change |
High |
Low |
|
May’24 |
4130 |
4145 |
-29 |
4172 |
4120 |
|
Jun’24 |
4043 |
4060 |
-28 |
4088 |
4036 |
|
Jul’24 |
3989 |
4010 |
-23 |
4028 |
3980 |
|
Aug’24 |
3936 |
3958 |
-24 |
3976 |
3928 |
|
BY TEAM ABDUL HAMEED |
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Exports Surge Amid Festive Season
In March, exports from Malaysia, the world’s second-largest palm oil producer, surged by 28.61% month-on-month to reach 1.32 million metric tons. This spike was attributed to heightened demand during the Ramadan and Eid al-Fitr celebrations.
- Anticipated Demand Slowdown
However, traders predict a decrease in demand post-festivities, especially with more competitive pricing against rival vegetable oils.
Geopolitical Tensions Add Pressure
Geopolitical tensions escalated as a Russian drone attack targeted critical infrastructure in Ukraine’s Ivano-Frankivsk region, resulting in fires caused by debris. These tensions, coupled with missile attacks on port infrastructure in Ukraine, are anticipated to create logistical challenges. Consequently, this situation might lead to bullishness in the vegetable oils market.
Outlook for Crude Palm Oil (CPO)
Analysts foresee crude palm oil (CPO) maintaining its elevated position above RM4,000 per tonne in the short term. However, they suggest that the current price may have peaked for the year.
- Impact of Oil Prices
Oil prices experienced extended losses following a 3% drop in the preceding session. Investor attention shifted towards indications suggesting the avoidance of a broader conflict in the Middle East, alongside concerns regarding demand. Weaker crude oil futures diminish the attractiveness of palm oil as a biodiesel feedstock, impacting its market dynamics.
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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.
