Palm slips on firmer ringgit, weak crude, Chicago soyoil

JAKARTA: Malaysian palm oil futures fell on Monday, continuing their decline for the fifth straight session, pressured by ringgit’s persistent strength and weaker Chicago soyoil and crude.

The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange lost 93 ringgit, or 2.4%, to 3,788 ringgit ($902.33) a metric ton by the midday break.

“The strengthening of ringgit is eroding the export competitiveness of Malaysian palm oil, putting immediate pressure on prices,” said Darren Lim, commodities strategist at Singapore-based brokerage Phillip Nova.

“At the same time, market sentiment is weighed down by expectations of a seasonal rise in production and inventories in the coming months.”

The continued weakness in crude oil further dampened the appeal of palm and other vegetable oils as biodiesel feedstocks, Lim said, adding that these factors were creating a bearish undertone in the market.

Malaysia’s palm oil inventories are estimated to rise for the second consecutive month in April, as the industry approaches peak production season, with the second half of the year expected to bring in significant output increases, a Reuters survey showed.

Oil prices fell more than $2 a barrel in early Asian trade after OPEC+’s plan to further accelerate oil output hikes, spurring concerns about more supply. Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.

The ringgit, palm’s currency of trade, strengthened 1.41% against the US dollar, making the commodity more expensive for buyers holding foreign currencies.

India’s April palm oil imports drop, remain below normal levels

Soyoil on the Chicago Board of Trade slipped 2.14%.

The Dalian Commodity Exchange is closed from May 1 to May 5 for the Labour Day holidays.

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

Palm oil may bounce to 3,951 ringgit per metric ton, as the market may have stabilized around 3,828 ringgit, according to Reuters’ technical analyst Wang Tao.