Malaysian palm oil futures traded sideways on Thursday, with support from rising rival vegetable oils tempered by a strengthening ringgit.
Malaysian palm oil futures maintained a stable trajectory on Thursday, following two consecutive sessions of gains. The benchmark palm oil contract for July delivery (FCPO1!) on the Bursa Malaysia Derivatives exchange closed largely unchanged as gains from higher prices in competing vegetable oils were offset by the strength of the Malaysian ringgit.
Rival Oils Provide Price Support
Palm oil futures had been buoyed in earlier sessions by rising prices in other vegetable oils, including soy and sunflower oil, which are seen as direct competitors. The uptick in global demand for alternative oils provided some support to the palm oil market, contributing to the recent positive momentum in the market.
Ringgit’s Strength Limits Upside
However, the strength of the Malaysian ringgit posed a significant counterbalance. A stronger ringgit typically makes palm oil more expensive for foreign buyers, reducing global demand and curbing price increases. The currency has gained against major currencies in recent days, dampening the upward pressure on palm oil prices despite the positive influence from rival oils.
Market Outlook
Traders are closely monitoring the currency’s movements, as further appreciation in the ringgit could weigh on export competitiveness, while sustained strength in rival vegetable oils could offer ongoing support for palm futures.
In the broader context, analysts are watching for any changes in demand from key importing countries, as well as the impact of weather conditions on palm oil production. The market remains highly sensitive to both currency fluctuations and international commodity price trends.
