Palm oil futures experienced continued growth on Tuesday, driven by the prevailing hot weather in Malaysia, one of the leading producers. Additionally, robust export figures and stronger performance by competing oils contributed to the upward trend. The July delivery benchmark palm oil contract on the BMD Exchange recorded a gain of 25 ringgit, or 0.63%, reaching 3,969 ringgit ($830.68) per metric ton.

Export Projections and Market Dynamics

The Malaysian Meteorological Agency issued Level 1 hot weather alerts in more than ten areas on Monday, further highlighting the impact of weather on palm oil production. Meanwhile, the Indonesian trade ministry anticipates a rebound in palm oil exports for April, following below-average shipments in March and February. This positive outlook is bolstered by a recovery in Dalian’s most-active soyoil contract, which surged by 2.09%, alongside a 1.06% increase in its palm oil contract. Additionally, rising soyoil prices on the Chicago Board of Trade, up by 0.33%, further contributed to the optimistic market sentiment.

Palm Oil Market Dynamics and Price Factors

Palm oil prices are intricately linked to movements in related oils, as they vie for dominance in the global vegetable oils market. Notably, the surge in crude oil prices, propelled by favorable economic data from Europe, has made palm oil a more appealing option for biodiesel feedstock. In response to market dynamics, Malaysia maintained its export tax for crude palm oil at 8% for May and adjusted its reference price accordingly.

Outlook and Projections

Looking ahead, industry analysts foresee continued growth in palm oil prices, with projections indicating a potential rise towards resistance levels of RM3,990-4,000 per ton.(As we said before in our report) However, support levels are expected to remain steady at RM3,840-3,860 per ton. In Indonesia, the top producer, efforts to revive palm oil exports are underway, further contributing to the positive market sentiment. Despite concerns over Argentine crops and disruptions in Ukrainian grains ports, the overall outlook remains bullish, albeit with some speculation of lower demand in the short term following the conclusion of recent festive buying seasons.

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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 Bullish Position due to narrow gap between rival soft edibles oils, it may hovering in the range of MYR3,950 to MYR4,300 per ton.