Palm oil falls due to softer crudes, rising rival oils and falling stocks

Malaysian palm futures fell for the second consecutive session on Wednesday, to their lowest level in more than two months. They were dragged down by weaker edible oils from rival producers, lower crude oil prices, and higher stocks at May's end.

By midday, the benchmark palm oil contract on Bursa Malaysia's Derivatives exchange for August delivery had fallen 28 ringgit or 0.72% to 3,836 Ringgit ($905.36) per metric ton.

A Kuala Lumpur based trader stated that "slow growth in export demands amidst high stocks levels may continue, pressuring the prices and dampening the market sentiment".

Malaysian palm oil stocks rose to their highest level since eight months in May, as an increase in production and imports offset exports that reached their highest levels in six months.

Exports of Malaysian Palm Oil Products between June 1-10 were estimated to have increased by 8.1% to 26.4% on a monthly basis, according the cargo surveyors.

The European Commission's data shows that imports of palm oil into the European Union for the 2024-25 seasons, which began in July, dropped by 19% on June 8 to 2,69 million tonnes.

An industry expert predicted that demand for palm oil in India and China will increase over the next few months, as recent price corrections offer attractive entry levels for big buyers.

Dalian's palm oil contract, which is the most active contract, fell by 2.13% while soyoil contracts in Dalian dropped by 0.82%. Chicago Board of Trade Soyoil fell 0.21%.

As palm oil competes to gain a share in the global vegetable oil market, it tracks the price fluctuations of competing edible oils.

The oil prices in Asian trade on Tuesday were lower as the markets awaited the results of the U.S. - China trade talks that have yet to be reviewed and approved by the presidents of both countries. Weak demand for oil from China, coupled with OPEC+'s increased production, weighed on the market.

Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.

The palm ringgit's trade currency, the dollar, has weakened by 0.09%, making it slightly cheaper for foreign buyers.

Technical analyst Wang Tao stated that palm oil could test a level of resistance of 3,889 Ringgit per metric tonne. A break above this level could lead to gains of up to 3,592 ringgit.

(source: Reuters)