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Malaysian palm oil futures declined on Monday for a fifth consecutive session, weighed down by a strengthening ringgit and falling crude soybean oil and crude oil prices on the Chicago Board of Trade.
The benchmark palm oil contract for July delivery on Bursa Malaysia Derivatives fell 93 ringgit, or 2.4%, to 3,788 ringgit ($902.33) a tonne at the midday break.
Darren Lim, a commodities strategist at Singapore-based brokerage Phillip Nova, said:
"The stronger ringgit is undermining the competitiveness of Malaysian palm oil exports, putting direct pressure on prices."
He added:
"At the same time, market sentiment is being affected by expectations of a seasonal rise in production and stocks over the coming months."
Lim noted that persistently weak crude oil prices are further reducing the appeal of palm oil and other vegetable oils as feedstocks for biofuel production, saying these factors are creating a bearish mood in the market.
Malaysia's palm oil stocks are expected to rise for a second straight month in April as the industry approaches its peak season, with output set to climb sharply in the second half of the year, according to a Reuters survey.
Oil prices fell by more than $2 a barrel in early Asian trade after OPEC+ unveiled plans to accelerate production increases, stoking concerns about oversupply. This makes palm oil a less attractive feedstock for biofuel production.
The ringgit, palm oil's currency of trade, gained 1.41% against the US dollar, making the commodity more expensive for buyers holding foreign currencies.
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On the Chicago Board of Trade, soybean oil prices fell 2.14%.
China's Dalian Commodity Exchange is closed from 1 to 5 May for the Labour Day holiday.
Palm oil tends to track price movements in other competing vegetable oils, as it competes for a share of the global vegetable oils market.
Reuters technical analyst Wang Tao expects palm oil to rebound to 3,951 ringgit a tonne, with the possibility that the market has stabilised around the 3,828 ringgit level.
Source: Business Recorder