Palm oil falls due to weak crude and Chicago soyoil.

Malaysian palm oils futures continued to decline on Monday as they fell for a fifth consecutive session under pressure from the ringgit's strength and the weaker Chicago crude and soyoil.

The benchmark contract for palm oil delivery in July on the Bursa Derivatives exchange lost 54 ringgit or 1.39% to $3,827 ringgit (US$912.28 per metric ton) at the close.

The strengthening of the ringgit has eroded the competitiveness of Malaysian Palm Oil, putting immediate downward pressure on its prices, said Darren Lim. Commodities strategist at Singapore-based Phillip Nova.

The market is also weighing down on the expectations of an increase in production and inventory in the coming months.

Lim stated that the continued decline in crude oil has further dampened the appeal for palm and other vegetable oil as feedstocks for biodiesel. These factors are creating a negative undertone on the market.

A survey found that Malaysian palm oil inventories rose for the second month in a row in April as the industry approached peak production. The second half of the calendar year is expected to see significant increases in output, the study showed.

Oil prices dropped more than 2% Monday, after OPEC+ decided to increase oil production at a faster pace over the weekend. This sparked concerns that more supply would enter a market with an uncertain outlook for demand.

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

The palm ringgit's currency has strengthened by 1.48% compared to the U.S. Dollar, increasing the price of the commodity for buyers who hold foreign currencies.

Chicago Board of Trade Soyoil fell by 1.15%. Dalian Commodity Exchange will be closed for Labour Day from May 1 to 5.

As palm oil competes to gain a market share in the global vegetable oil market, it tracks the prices of competing edible oils. $1 = 4,1950 ringgit (Reporting and editing by Dewi Kuritawati, Mrigank Dahniwala, and Shreya Biwas)

(source: Reuters)