Palm oil prices in Malaysia dropped on Monday as there are expectations that more palm oil will be produced soon, and weaker soyoil prices in the U.S. also affected the market.
The main palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange fell by 2.42%, reaching 3,959 ringgit ($906.57) per metric ton by midday.
The price drop was mainly due to lower prices of soyoil in Chicago and the expectation of more palm oil being produced in the coming weeks, said David Ng, a trader at Kuala Lumpur-based Iceberg X Sdn Bhd.
He added, “We see support at 3,900 ringgit and resistance at 4,080 ringgit.”
Read More: Tejas Networks Shares Drop 9.51% to Rs 778.10 After Reporting Q4 FY25 Loss of Rs 71.80 Crore
The Malaysian Palm Oil Board is expected to release data on palm oil supply and demand on May 13. A survey suggests that palm oil stock levels likely increased for the first time in six months, while production went up by 10.3% from the previous month.
In China, soyoil prices fell by 1.66%, while palm oil prices also decreased by 1.75%. In Chicago, soyoil prices dropped by 0.9%.
Palm oil prices often follow the movement of other edible oils, like soyoil, since they compete for a share of the global vegetable oil market.
Oil prices rose slightly but are still uncertain due to trade talks between the U.S. and China, affecting global growth and fuel demand. There’s also concern that OPEC+ may increase supply, which could make things worse for oil prices. Stronger oil prices can make palm oil a more attractive option for biodiesel.
The Malaysian ringgit strengthened by 0.07% against the U.S. dollar, making palm oil more expensive for buyers using other currencies.
Cargo surveyors estimated that Malaysia’s palm oil exports during April 1-25 rose between 13.8% and 14.8% compared to the same period in March.
Experts believe that palm oil prices could settle between 3,972 ringgit and 4,000 ringgit per metric ton after completing a price cycle from 3,861 ringgit.
