Palm Oil Futures FCPO Updates & Factors Influencing Decline | April 25, 2024

palm oil

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

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.