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 30 ringgit, or 0.76%, to 3,909 ringgit ($827.48) a metric ton at closing.
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.
Palm posts second week of gains on stagnant output, stronger rival oils
The market will be focusing on Jan. 1-20 production estimates from the Malaysian Palm Oil Association, said Sathia Varqa, a senior analyst at Singapore-based Fastmarkets Palm Oil Analytics.
“Palm is rapidly losing its competitiveness to soft oils. Palm prices need to go down to regain the competitiveness,” he added.
Dalian’s most-active soyoil contract rose 0.48%, while its palm oil contract gained 0.11%. Soyoil prices on the Chicago Board of Trade climbed 0.30%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Oil prices lost more ground on Monday as economic headwinds pressured the global oil demand outlook and offset geopolitical concerns in the Middle East and an attack on a Russian fuel export terminal over the weekend. Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
The Malaysian ringgit, palm’s currency of trade, weakened 0.19% against the dollar. A weaker ringgit makes palm oil more attractive for foreign currency holders.
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