The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange closed lower on Monday, tracking weakness in other commodity markets and a strengthening Malaysian ringgit, traders said.
The contract fell 0.84% to 3,909 ringgit ($843.00) per metric ton as the market reacted to external factors influencing edible oils.
A Kuala Lumpur-based trader noted, “Bursa Malaysia palm oil started lower because of tracking spill-over weakness from Dalian Commodity Exchange market and firm ringgit.”
In China, Dalian’s most-active soyoil contract declined 1.08%, while its palm oil contract rose 0.69%. Meanwhile, soyoil prices on the Chicago Board of Trade were down 0.81%. Palm oil, which competes with other edible oils in the global market, closely follows their price movements.
The Malaysian ringgit, in which the palm oil contract is traded, strengthened by 0.39% against the US dollar, making palm oil less appealing to foreign buyers.
In Indonesia, the Trade Ministry’s plans to revise domestic market obligation rules for palm oil have stirred market interest, although traders are awaiting specifics before assessing the potential impact.
“Indonesia plans to revise palm oil domestic market rules offer little cues as market been talking about it for months. Hence, need further details before can assess the impact of it,” a trader said.
Meanwhile, Malaysian palm oil exports for the period of July 1-25 are estimated to have risen significantly compared to the previous month. According to Cargo surveyor Societe Generale de Surveillance, exports reached 1,193,049 metric tons, up from 908,517 tons in the June 1-25 period. Cargo surveyors Intertek Testing Services and Amspec Agri reported a 31% year-on-year increase in exports.
Market participants will continue to monitor developments closely as they await further clarity on Indonesian regulatory changes and assess their implications on global palm oil markets.
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