Palm oil prices drop on weak Chicago exchanges but export data limits losses

The price of Malaysian palm oils futures fell on Thursday after four sessions of gains. This was due to the weakness in Chicago soyoil, but strong export data helped limit losses.

At closing, the benchmark palm oil contract on Bursa Malaysia's Derivatives Exchange for July delivery fell 61 ringgit or 1.55% to 3,862 Ringgit ($902.34) per metric ton.

Exports of Malaysian Palm Oil

AmSpec Agri Malaysia, an independent inspection company, said that the number of products shipped between April 1 and 15 increased by 14.2%, to 514 713 tonnes, from 450 657 tonnes.

A Kuala Lumpur-based broker said, "The positive figures for exports do provide support but Chicago Soyoil fell 270 points and our CPO Futures are weighed down by that."

Prices of soyoil on the Chicago Board of Trade CBOT dropped by 5.72%.

The steepest daily drop

In the last two years, the market has been under pressure due to the falling crude oil price and the uncertainty surrounding the U.S. Biofuel Policy.

Dalian's soyoil contract, which is the most active one, dropped by 0.80% while palm oil contracts for June delivery fell by 0.74%.

As palm oil competes to gain a share in the global vegetable oil market, it tracks the prices for rival edible oils.

Indonesia will increase its crude palm (CPO), export levy from 7.5% to 10% starting May 17 to fund the country's increased mandate for biodiesel blends.

A leading industry group said that India's imports of vegetable oil plunged in April to the lowest level in over four years. Palm oil imports were primarily responsible for this decline, which pushed inventories down to their lowest levels in almost five years.

The Rosario grain exchange has raised its estimate of Argentina's soybean production for 2024-25 to 48.8 million metric tonnes from the earlier 45.5 million metric tons.

The Malaysian ringgit (the palm's trade currency) rose on Thursday for a second day, gaining 0.05% versus the U.S. Dollar, increasing the cost of the contract for holders of foreign currencies.

Palm oil FCPOc3 could retest the support level of 3,921 Ringgit per metric tonne. A break below this mark would trigger a drop into the range 3,871-33,887 ringgit. ($1 = 4.2800 ringgit)

(source: Reuters)