JAKARTA: Malaysian palm oil futures extended losses 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 54 ringgit, or 1.39%, to 3,827 ringgit ($912.28) a metric ton at the close.
“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.
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Oil prices fell more than 2% on Monday after OPEC+ decided over the weekend to further speed up oil output hikes, spurring concerns about more supply coming into a market clouded by an uncertain demand outlook.
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
The ringgit, palm’s currency of trade, strengthened 1.48% against the U.S. dollar, making the commodity more expensive for buyers holding foreign currencies.
Soyoil on the Chicago Board of Trade slipped 1.15%. 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.
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