Malaysian palm oil futures saw a slight increase on Wednesday, reversing earlier declines as traders awaited crucial domestic supply and demand data for more direction. The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange rose by 18 ringgit or 0.42%, reaching 4,289 ringgit per metric ton at the midday break. This followed a sharp drop of up to 1.80% earlier in the session, attributed to weaker edible oil prices in Dalian and the strengthening of the ringgit.
Traders are anticipating weaker output growth and lower stock levels in Malaysia, which pushed the futures higher in the lead-up to the release of the Malaysian Palm Oil Board’s (MPOB) key crop report, scheduled for Thursday. According to David Ng, a proprietary trader at Iceberg X Sdn Bhd in Kuala Lumpur, these expectations have contributed to the market’s movement.
Elsewhere, Dalian’s most-active soyoil contract experienced a 0.77% decline, while the palm oil contract fell by 1.4%. On the Chicago Board of Trade, soyoil prices climbed by 1.04%. The price of palm oil is influenced by fluctuations in other edible oils since they compete in the global vegetable oil market.
The ringgit, which is the currency used in palm oil trade, strengthened by 0.07% against the US dollar, making palm oil more expensive for foreign buyers. Meanwhile, crude oil prices remained steady during Asian trading, as investors considered the impact of the ongoing Middle East conflict alongside predictions of weaker demand. Brent crude futures were up by about 0.8% at 0535 GMT. The increase in crude oil prices could enhance the appeal of palm oil as a feedstock for biodiesel production.
In Indonesia, the world’s largest producer of palm oil, the implementation of higher biodiesel mandates is expected to limit the supply of vegetable oils. Additionally, there is concern among companies that have invested in sourcing agricultural products compliant with the European Union’s anti-deforestation law. These companies could face financial setbacks if the EU decides to delay the enforcement of the legislation by a year.
According to Reuters technical analyst Wang Tao, palm oil may see further losses, potentially falling within the range of 4,119 to 4,152 ringgit per ton. This follows the reversal of the uptrend that began with the September 30 low of 3,987 ringgit.
Dekel Agri-Vision PLC (LON:DKL) aspires to become a leading agro-industrial company in West Africa, one that creates value for shareholders whilst at all times placing the interests of the local communities and environment in which it operates in at the heart of its operations.
