Key Takeaways
- Malaysian palm oil futures fell for the second consecutive session.
- Weak rival vegetable oils on Chicago and Dalian exchanges limited gains.
- Strong crude oil and a weaker ringgit supported the benchmark contract.
Malaysian palm oil futures experienced a second consecutive decline on Monday, following a 4.61% drop the previous week. The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange closed at 4,663 ringgit ($1,142.05) per metric ton, down 9 ringgit or 0.19% from the previous session.
The contract traded within a narrow range of 4,642 to 4,720 ringgit, reflecting the influence of weak vegetable oils on the Chicago and Dalian exchanges. A Kuala Lumpur-based trader noted that while strong crude oil and a softer ringgit provided support, the weakness in Dalian and Chicago oils capped potential gains.
Dalian's most-active soyoil contract fell 0.84%, while its palm oil contract lost 1.6%. Soyoil prices on the Chicago Board of Trade ticked down 0.24%, further impacting the palm oil market. Palm oil, which competes for a share of the global vegetable oils market, tracks the price movements of its rivals.
Brent crude rebounded more than 3% on Monday, following US President Donald Trump's rejection of a peace deal from Iran to resolve their conflict and reopen the Strait of Hormuz. This increase made palm oil a more attractive option for biodiesel feedstock, providing some support to the benchmark contract.
The ringgit, the currency of trade for palm oil, weakened 0.25% against the dollar, making the commodity slightly cheaper for buyers holding foreign currencies. This factor also contributed to the slight support seen in the benchmark contract.
Technical analyst Wang Tao projected that palm oil may extend losses into a range of 4,588-4,622 ringgit per ton, based on a projection analysis. This projection reflects the current market dynamics and potential future trends.
Export data for Malaysian palm oil products from September 1-25 showed a significant decline. Cargo surveyors Intertek Testing Services and AmSpec Agri Malaysia reported that exports likely fell between 15.1% and 24.3% from the previous month. Similarly, Indonesia's palm oil exports in July stood at 3.19 million metric tons, down 9.87% from the same period last year, according to the palm oil association GAPKI.
These developments highlight the ongoing volatility in the palm oil market, influenced by global oil prices, currency fluctuations, and export trends.
