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Malaysian palm oil futures fell by 2% due to expected increase in stocks and competition from soybean oil.
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Malaysian palm oil futures fell by 2% due to expected increase in stocks and competition from soybean oil.

Мalaysian palm oil futures have dropped by 2% due to expectations of increased stocks and improved market conditions for soybean oil in the US. Prices of palm oil and soybean oil are interconnected, competing in the global market.

Oil reserves have increased in Malaysia due to a lack of exports.

9 July 2024 9 July 2024

Currently, futures for Malaysian palm oil have fallen by more than 2%, marking the most significant decline in a month. This drop is attributed to the expected increase in reserves and loss of competitiveness for soybean oil due to unexpectedly favorable growing conditions for soybeans in the USA.

The benchmark palm oil contract for delivery in September on the Bursa Malaysia Derivatives Exchange dropped by 84 ringgit, which is 2.08%, reaching 3958 ringgit ($841.05) per ton. The contract had risen by 3.2% the previous week.

FCPO (Close / Change / High /
JUL4 4.016 -72 (4030/4010)
AUG4 3,978 -75 (4019/3950)
SEPA 3,958 -84 (4008/3933)
OCT4 3,946 -80 (3995/3923)
NOV4 3,948 -69 (3986/3919)
DEC4 3,951 -68 (3995/3924)
JAN5 3,965 -66 (4002/3938)
FEB5 3,983 -61 (4016/3955)
MAR5 3,981 -66 (4030/3959)
‘APR5 3,974 -S7 (4008/3946)
MAY5 3,957 -59 (3992/3933)
JUN5 3,919 -79 (3948/3919)

"Since the palm oil market was closed on Monday, we are now observing a lag in the drop in soybean oil prices over the past two days," said a dealer working for an international trading company in Mumbai.

Futures for soybean oil in the USA fell by 1.8% following a 0.9% decrease on Monday.

Palm oil prices are influenced by changes in the market for other oils, as they compete in the global vegetable oil market.

To reduce palm oil reserves in Malaysia, the world's second-largest producer, it is necessary to increase exports, which will only be possible through price adjustments, noted the dealer.

In June, palm oil reserves in Malaysia increased for the third consecutive month due to slowed exports and decreased production compared to the previous month, according to Reuters survey data.

Based on the averaged forecasts of 12 traders, planters, and analysts surveyed by Reuters, palm oil reserves in Malaysia amounted to 1.83 million tons, which is 4.53% higher than at the end of May.

The Malaysian Palm Oil Council data publication is scheduled for July 10.

According to the technical analyst at Reuters, Wang Tao, palm oil may surpass the support level at 4027 ringgit per metric ton and decrease in the range of 3951 to 3989 ringgit.

CBOT soybean prices fell by 0.55% to $10.93-3/4 per bushel, following a 2.7% decrease the previous day. On Monday, soybean prices fell to their lowest level since 2020.

The US Department of Agriculture (USDA) on Monday raised ratings for the conditions of corn, soybean, and wheat crops to good and excellent. These indicators turned out better than analysts had expected.

(1 dollar = 4.7060 ringgit)

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