Palm oil futures saw a significant downturn on Tuesday, marking their lowest point in over two months. The decline was attributed to a combination of decreasing exports in the world’s second-largest producer and the subdued prices of Chicago soyoil. The benchmark palm oil contract for July delivery on the BMD Exchange experienced a notable drop of 101 ringgit, or 2.58%, closing at 3,814 ringgit ($799.58).

Factors Influencing the Decline

This closing figure stands as the lowest since February 22nd. Independent inspection company AmSpec Agri reported an 11.5% decrease in Malaysian palm oil product exports for April compared to March, while cargo surveyor Intertek Testing Services indicated a 9% decline.

• Soyoil Price Instability

Dalian’s most-active soyoil contract observed a decrease of 0.13%, whereas its palm oil counterpart slipped by 1.08%. Furthermore, soyoil prices on the Chicago Board of Trade exhibited a 2.86% decrease. The decline in soyoil prices has intensified pressure on palm oil to reclaim market share in the physical market.

• Market Response and Outlook

Investors are closely monitoring developments in the oil market, particularly amidst ongoing Israel-Hamas negotiations and uncertainties surrounding U.S. interest rate policies. The prospect of a ceasefire in the Middle East conflict, coupled with potential shifts in monetary policy, could influence market sentiments in the coming days.Additionally, the stabilization of crude oil prices presents palm oil as an attractive option for biodiesel production, thereby potentially bolstering demand.

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• Currency Dynamics

The Malaysian ringgit, the primary currency for palm oil trade, experienced a marginal depreciation of 0.1% against the dollar. This depreciation renders palm oil more affordable for foreign buyers, potentially mitigating some of the adverse effects of declining export performance.

• Anticipated Developments

Forecasts suggest a continuation of bearish trends, with expectations of lower export figures and declining palm yields amidst hot and dry weather conditions in Malaysia. However, market activity is expected to be subdued on Wednesday due to a public holiday.

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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 Defensive or Bearish Position due to narrow gap between rival soft edibles oils, it may hovering in the range of MYR3,600 to MYR4,000 per ton.