On Monday, Malaysian palm oil futures fell by 3.02% after the strengthening of the ringgit and the weakening of competing oils, despite the contract recording a monthly increase. The base contract for palm oil with delivery in October on the Bursa Malaysia Derivatives Exchange dropped to 3885 ringgits ($861.99) per ton at the closing price, which is the lowest level in over a month. However, the contract showed a monthly increase of 2.53%.
“After the rally last week on the Russian-Ukrainian news market, it seems to have taken a breather along with the strengthened ringgit,” said a trader from Kuala Lumpur, according to Reuters.
The most active Dalian contract for soybean oil also declined by 2.12%, while the palm oil contract fell by 2.38%. Soybean oil prices on the Chicago Mercantile Exchange lost 2.51%.
Data from AmSpec Agri Malaysia showed that palm oil exports from Malaysia increased by 7.8% in July compared to the previous month, while surveyor Intertek Testing Services (ITS) reported a growth in exports of 14% in July.
Oil prices hovered around a three-month high on Monday, demonstrating the largest monthly increase in over a year on expectations that Saudi Arabia would extend voluntary production cuts until September and reduce global supply.
Stronger crude oil futures make palm oil a more attractive option for biodiesel production.
The price of palm oil may jump to 4057 ringgits per metric ton before resuming a downward trend to retest support at 3964 ringgits.
(1 dollar = 4.5070 ringgits)
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