Palm oil drops on losses in rival cooking oils and poor demand
22/05/2023 (The Malaysian Reserve) - Palm oil tumbled in Kuala Lumpur, dragged down by losses in competing cooking oils as well as weaker-than-expected demand from key buyers.
Palm continues to be under pressure due to weaker prices of soy, sunflower and rapeseed oils, said Sandeep Singh, director The Farm Trade, a Kuala-Lumpur based trading and consulting company. Expectations of a record Brazilian soy harvest and better planting of US soybeans and corn are also bearish for the market, he said.
Better production prospects for palm oil, as well as sluggish Chinese and Indian demand, are also weighing on the market, Singh said.
Malaysian palm oil exports rose just 1.6% in the first 20 days of May from a month earlier, according to cargo surveyor Intertek Testing Services, as weaker purchases from China and EU offset slightly stronger shipments to India.
The tropical oil could face more downside on improving supply and thin discounts to compete against soyoil, according to Bloomberg Intelligence analyst Alvin Tai. Palm oil’s narrow discount to soybean oil could weigh on its prices, which means palm demand will likely face more competition, he wrote in a note on Monday.
Benchmark futures fell as much as 2.8%, the biggest intraday drop since May 16. Soybean oil, palm’s closest food and fuel substitute, slumped 1.1% in Chicago. – Bloomberg