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

Malaysian palm futures continued to fall for the second consecutive session on Wednesday, closing at their lowest level in over two weeks. Weakened rival edible oil prices as well as rising stocks of May-end oil were to blame.

The benchmark contract for palm oil delivery in August on the Bursa Derivatives Market fell 25 ringgit (0.65%) to 3,839 Ringgit ($906.49) per metric ton, its lowest price since May 26.

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 2.33%. Chicago Board of Trade Soyoil fell 0.19%.

As palm oil competes to gain a market share on the global vegetable oils markets, it tracks the price changes of competing edible oils. The ringgit (palm's trade currency) fell by 0.05% versus the dollar. This made the commodity slightly more affordable 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 could lead to gains of up to 3,592 ringgit.

(source: Reuters)