Palm slips on weak export demand, soft soyoil and crude oil

KUALA LUMPUR: Malaysian palm oil futures fell on Thursday after rising in the previous session, as sluggish export demand and weaker soyoil and crude oil prices pressured the market.

The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange was down 36 ringgit, or 0.77%, at 4,641 ringgit ($1,156.49) a metric ton by the midday break.

The market traded lower driven by weakness in soybean oil and crude oil prices during Asian hours, while recent softness in crude palm oil demand also weighed, said David Ng, a proprietary trader at Kuala Lumpur-based trading firm Iceberg X Sdn Bhd.

Dalian’s most-active soyoil contract fell 0.65%, while its palm oil contract shed 1.19%. Soyoil prices on the Chicago Board of Trade were down 0.36%.

Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market. Cargo surveyors estimated that exports of Malaysian palm oil products for May fell between 8.8% and 15.5% from a month earlier.

Oil prices eased as Israel and Lebanon’s ceasefire agreement boosted hopes for a broader deal to end the US-Israeli war with Iran, while the US House approved a resolution seeking to curb President Donald Trump’s war powers.

Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.

The ringgit, palm’s currency of trade, weakened 0.58% against the dollar, making the commodity cheaper for buyers holding foreign currencies.

Malaysia’s palm oil inventories are expected to rise for a second straight month in May, as sluggish exports outweigh the impact of lower output, a Reuters survey showed.

Palm oil may retest a resistance at 4,691 ringgit per ton, a break above which could lead to a gain to 4,734 ringgit, Reuters technical analyst Wang Tao said.