Tuesday saw a slight decline in Malaysian palm oil futures, extending losses for the second consecutive session as weaker competing vegetable oils impacted prices. Nevertheless, declines were restrained by higher crude oil prices.
On the Bursa Malaysia Derivatives Exchange, the benchmark palm oil contract for May delivery fell 7 ringgit, or 0.16%, to 4,276 ringgit ($956.17) in early activity.
The most active palm oil contract (DCPcv1) and soy oil contract (DBYcv1) in Dalian both experienced losses.
Soybean oil prices increased 0.12% on the Chicago Board of Trade (BOcv1).
Since they contend for a piece of the global vegetable oil market, palm oil is impacted by changes in the prices of related oils. Oil prices started to rise as business leaders expressed worries about the market’s limited spare capacity and the unpredictability of Russian supply as demand from top oil importer China is increasing.
Palm is a more enticing alternative for biodiesel feedstock due to stronger crude oil futures.
According to a top industry analyst, the deforestation regulation of the European Union is unlikely to have a significant influence on Southeast Asian palm oil demand, given the surplus is decreasing due to increased demand from developing nations.
According to Reuters technical expert Wang Tao, palm oil price may test a support level of 4,225 ringgit per tonne; a break below this level might cause a dip into the 4,153–4,197 ringgit zone.
Investors watched the congressional testimony of U.S. Federal Reserve Chair Jerome Powell, which should begin later in the day, for hints on the central bank’s upcoming interest rate move. Asian financial markets saw minimal movement.
According to a senior industry official who spoke to Reuters on Tuesday, India’s imports of palm oil might increase by 16% to a four-year high of 9.17 million tonnes in 2022/23 as demand is expected to increase following two years of decline because of COVID-led lockdowns.
Palm oil futures, which are now trading close to their best level in four months, may have more support from increased purchases by the world’s largest importer of vegetable oils. According to traders, India’s imports of palm oil in the first four months of the 2022–23 marketing year, which began on Nov. 1st, increased by 74% to 3.67 million tonnes.
India mostly purchases palm oil from Thailand, Malaysia, and Indonesia. It imports soybean and sunflower oil from Brazil, Russia, Ukraine, Argentina, and these countries.
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