Malaysian palm oil futures continued their downward trend on Friday, December 13, 2024, following weakness in competing vegetable oils traded on the Chicago and Dalian exchanges. The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange dropped 35 ringgit, or 0.71%, to 4,886 ringgit ($1,097.98) per metric ton by midday.
So far this week, the contract has fallen by 4.72%, and experts suggest that prices are range-bound, awaiting further market direction. A Kuala Lumpur-based trader noted, “The futures seem to be trading range-bound, awaiting fresh lead. We need to see how the Dalian exchange behaves to determine the next direction.”
Impact of Rival Oils and Market Conditions
On the Chicago Board of Trade, soyoil futures lost 0.61%. Similarly, Dalian’s most-active soyoil contract fell 0.97%. However, Dalian’s palm oil contract saw a slight increase of 0.44%. Palm oil prices often track the price movements of rival edible oils, as they compete for a share in the global vegetable oils market.
In India, palm oil imports in November declined by 0.4% from October, totaling 841,993 metric tons, according to the Solvent Extractors’ Association of India. Meanwhile, cargo surveyor Intertek Testing Services projected a 3.9% rise in Malaysian palm oil exports for the period from December 1-10. In contrast, independent inspection company AmSpec Agri Malaysia forecasted a more modest 1.1% increase.
Market Outlook and Crude Oil Prices
Meanwhile, crude oil prices eased, as investors focused on a forecast of ample supply and downplayed the expected boost in demand from Chinese stimulus measures. The market is also anticipating another interest rate cut by the Federal Reserve next week. Weaker crude oil prices make palm oil less attractive as a biodiesel feedstock.
Looking ahead, palm oil futures are expected to test resistance at 4,961 ringgit per metric ton. If prices break above this level, they could rise further toward 5,045 ringgit, according to technical analyst Wang Tao from Reuters.
