SINGAPORE: Malaysian palm oil futures snapped two consecutive sessions of gains on Monday, weighed down by weakness in crude oil prices, although losses were limited by higher exports and production concerns.
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange fell 7 ringgit, or 0.18%, to 3,932 ringgit ($832.70) a metric ton by midday.
The contract jumped 2.2% last week on concerns about stagnant production in the world’s top palm oil producers.
Crude palm oil production in Malaysia, the world’s second-largest producer, is seen rising 1% in 2024 form a year earlier to 18.75 million tons, while output in top producer Indonesia is forecast to rise 0.6% to 48.87 million tons, a Reuters survey showed last week.
Exports of Malaysian palm oil products for Jan. 1-20 rose 3.62% from a year earlier to 867,828 tons, cargo surveyor Intertek Testing Services said.
Another cargo surveyor, AmSpec Agri Malaysia, said exports during the same period fell 2.7% to 828,910 tons.
“Higher exports and a lower production outlook for January have been largely priced in,” said Sathia Varqa, a senior analyst at Singapore-based Fastmarkets Palm Oil Analytics.
The market will be focusing on Jan. 1-20 production estimates from the Malaysian Palm Oil Association, he said. Dalian’s most-active soyoil contract rose 0.77%, while its palm oil contract gained 0.4%.
Palm firms on stronger rival oils, crude oil weakness limits gains
Soyoil prices on the Chicago Board of Trade climbed 0.36%. Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Oil prices struggled to push ahead as economic headwinds pressured the global oil demand outlook.
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
The Malaysian ringgit, palm’s currency of trade, weakened 0.15% against the dollar.
A weaker ringgit makes palm oil more attractive for foreign currency holders.
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