VEGOILS-Palm oil ends lower on rising output, weak demand worries
16.05.2023 (Hellenic Shipping News) - Malaysian palm oil futures closed lower on Monday, weighed by concerns over higher production as well as weak demand after larger rival Indonesia lowered its exports tax.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange slid 31 ringgit, or 0.85%, to 3,617 ringgit ($815.56) a tonne, down for a third session out of four.
Market players are concerned about higher production for May in Indonesia, which has made them cautious about a weak energy market, Refinitiv Agriculture Research said in a note.
External markets have significantly weighed on palm, following erosions in broader commodities, including Dalian palm olein, Chicago soybean, and crude futures, Refinitiv said.
Top producer Indonesia set its crude palm oil reference price lower than the previous month at $893.23 per tonne for the period of May 16-31, according to a trade ministry decree.
This effectively reduces the crude palm oil export tax and levy for Indonesian palm oil, making it more competitive than neighbouring Malaysia.
Exports from Malaysia during the May 1-15 period rose 4% from the month before, cargo surveyor Intertek Testing Services said. AmSpec Agri Malaysia, another cargo surveyor, reported a 5.2% rise in exports.
U.S. soybean and corn supplies were expected to rise sharply in the coming year due to forecasts of a record harvest for both crops, the government said on Friday, raising the potential for further price declines for both commodities.
Soyoil prices on the Chicago Board of Trade were down 0.04%, extending losses to a sixth consecutive session. The Dalian’s most-active soyoil contract fell 0.2%, while its palm oil contract lost 0.7%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Refinitiv said the contract might fall towards the support levels of 3,450-3,470 ringgit a tonne this week, with resistance levels 3,700-3,720 ringgit a tonne.
Source: Reuters (Reporting by Mei Mei Chu; Editing by Sonia Cheema and Janane Venkatraman)