SINGAPORE: Malaysian palm oil futures rebounded on Monday to snap a six-day decline to track higher soyoil prices, although expectations of higher palm production, lower oil prices, and a stronger ringgit capped gains.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange rose 14 ringgit, or 0.36%, at 3,940 ringgit ($819.53) a metric ton at closing, ending its longest losing streak since September 2023.
Dalian’s most-active soyoil contract rose 0.29%, while its palm oil contract lost 1.21%. Soyoil prices on the Chicago Board of Trade ticked 0.87% higher.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
With destinations having rationed palm imports in response to high prices, palm is beginning to compete with alternative oils on price in anticipation of normal seasonally increased production, said Pranav Bajoria, director at Singapore-based brokerage Comglobal Pte Ltd.
Oil prices fell as the market focus switched to fundamentals after Israel and Iran played down the risk of an escalation of hostilities following Israel’s apparently small strike on Iran.
Palm oil surrenders gains amid higher expected production, weaker oil
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
The Malaysian ringgit, palm’s currency of trade, strengthened 0.13% against the dollar.
Independent inspection company AmSpec Agri Malaysia said exports of Malaysian palm oil products for April 1-20 climbed 14.3% from March 1-20 levels, while cargo surveyor Intertek Testing Services said palm exports rose 10.2%.
Indonesia’s palm oil exports in February were 1.3 million tons and exports for the March 1-27 period were at around 885,000 tons, trade ministry data showed on Monday.
Rains will pick up across Indonesia and Malaysia in late April, LSEG said in a weather forecast report, adding that “the uptick in rainfall without raising flooding concerns makes for a very positive outlook for Indonesia/Malaysia palm oil”.