Palm Oil Futures Extend Losses Amidst Weak Rival Oils and Increased Production
Malaysian palm oil futures experienced a second consecutive decline on Thursday, influenced by the downtrend in rival edible oils and elevated production levels in major palm oil-producing nations. The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange plummeted by 68 ringgit, marking a 2.03% decrease, with prices hitting 3,874 ringgit ($805.27) per metric ton during the midday break. Although there was a slight recovery from the intraday low of 3,817 ringgit, the overall trend remained bearish.
|
CPO FUTURES PRICES IN RINGGIT |
|||||
|
Month |
Last |
Open |
Change |
High |
Low |
|
May’24 |
3958 |
4054 |
-82 |
3951 |
3959 |
|
Jun’24 |
3914 |
3982 |
-70 |
3907 |
3925 |
|
Jul’24 |
3874 |
3942 |
-68 |
3872 |
3875 |
|
Aug’24 |
3850 |
3913 |
-64 |
3847 |
3859 |
|
BY TEAM ABDUL HAMEED |
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Factors Influencing Decline
- Increased Production
Bets of rising production in the current quarter also contributed to the downward pressure on palm oil prices. National news agency Bernama reported that Malaysia’s Programme Advisory Committee discussed strategies to enhance crop materials and farm management efficiency to bolster yields, reflecting efforts to counteract the effects of increased production.
- Currency and Oil Prices
The depreciation of the Malaysian ringgit and the relatively stable crude oil prices somewhat limited the extent of the downward momentum.
- Export Outlook
Despite the domestic challenges, the export outlook for Malaysian palm oil products improved. Data from cargo surveyors revealed a notable increase in shipments for April compared to the previous month. April 1-20 climbed between 10.2% to 14.3% from the same period in March. Last month, palm oil exports in the country jumped 28.6%, This positive trend in exports was also observed in Indonesia, the top producer of palm oil.
Market Outlook
Looking ahead, the performance of Malaysian palm oil futures may be influenced by various factors, including weather conditions, currency fluctuations, and global demand dynamics. Technical analysis suggests that palm oil prices may face resistance at 4,012 ringgit per ton, with the potential for further volatility in the market.
Click Here To View April 24, 2024 Report
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 MYR3,800 to MYR4,150 per ton.
