Palm oil falls due to weak competition and lack of fundamentals
The Malaysian palm futures continued to fall for the second consecutive session on Tuesday. This was due to the weakness of rival oils on the Dalian and Chicago market and the softer crude prices as a result of a lack fundamental triggers.
By midday, the benchmark palm oil contract on Bursa Derivatives Exchange for September delivery had fallen 29 ringgit or 0.73% to 3,957 Ringgit ($944.62) per metric ton.
"Market sentiment is cautious due to macro-uncertainties, and we are awaiting more clear fundamental signals," said Darren Lim. He is a commodities strategist with Singapore-based Phillip Nova.
In the absence of new fundamental triggers, palm oil prices were under pressure due to the low crude and edible oil price, as well as a stronger ringgit versus the U.S. Dollar.
Dalian's palm oil contract, which is the most active contract, dropped by 0.24%. Chicago Board of Trade Soyoil Prices fell 0.08%.
As palm oil competes to gain a share in the global vegetable oils industry, it tracks the price fluctuations of competing edible oils.
The oil prices fell on Tuesday due to expectations that OPEC+ will increase their output in August, and fears of a slowdown in the economy caused by higher U.S. Tariffs.
Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.
The statistics bureau reported that Indonesia exported 8,3 million metric tonnes of crude and refined Palm Oil from January to April.
Indonesia increased its crude palm oil reference price for July to $877.89 a metric ton, up from $856.38 a metric ton during June, according to a regulation issued by the trade ministry on Monday.
According to AmSpec Agri Malaysia (an independent inspection company), exports of Malaysian products containing palm oil for June increased by 4.3% compared to the previous month. Intertek Testing Services reported a 4.7% increase.
The palm ringgit's trade currency strengthened by 0.48% in relation to the dollar. This made the commodity more costly for buyers who hold foreign currencies.
Technical analyst Wang Tao stated that palm oil is neutral between 3,961-3.996 ringgits per metric tonne and an escape from this range could indicate a direction.
(source: Reuters)
