Palm down on weaker soyoil, prospect of increased output, but logs monthly gain

KUALA LUMPUR: Malaysian palm oil futures fell on Tuesday, as soft soyoil and an anticipated rise in production pressured the market, though the contract still logged a monthly gain.

The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange slid 39 ringgit, or 0.85%, to 4,549 ringgit ($1,114.40) a metric ton at the close.

The contract gained 0.31% this month, snapping two straight months of declines.

The market traded lower, tracking weakness in the soybean oil market during Asian hours, while the expectation of rising output in the coming weeks is also seen weighing on sentiment, said David Ng, a proprietary trader at Kuala Lumpur-based trading firm Iceberg X Sdn Bhd.

Dalian’s most-active soyoil contract fell 0.14%, while its palm oil contract shed 0.55%. Soyoil prices on the Chicago Board of Trade were down 0.33%.

Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market.

Oil prices slipped, and were set for their biggest quarterly loss since the COVID-19 pandemic in early 2020, with investors eyeing potential U.S.-Iran talks in Doha amid a strained interim ceasefire in the four-month-old war.

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

Cargo surveyors estimated that Malaysian palm oil product exports for June rose between 4.7% and 11.9% from a month earlier.

The ringgit, palm’s currency of trade, weakened 0.37% against the dollar, making the commodity slightly cheaper for buyers holding foreign currencies.

Indonesia’s palm oil exports, including refined products, were 2.78 million tons in April, versus 1.78 million tons in the same month last year, Indonesian Palm Oil Association data showed.