SINGAPORE: Malaysian palm oil futures dropped for a second straight session on Monday amid a stronger ringgit and market talk of India purchasing less palm oil in 2024.
The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange fell 26 ringgit, or 0.66% to 3,940 ringgit ($834.75) a metric ton at closing, the lowest close since Feb. 29.
The 35th Palm & Lauric Oils Price Outlook Conference & Exhibition is being held in Kuala Lumpur from March 4-6. Traders are awaiting cues on rival soyoil and the global supply-demand outlook of palm oil.
India, the world’s biggest vegetable oil importer, is expected to buy larger volumes of soyoil in 2024, while purchases of palm oil are likely to decline as compared with last year, a top dealer said on Monday on the sidelines of the conference.
Lower purchases of palm oil by India could keep inventories elevated in top producers Indonesia and Malaysia and weigh on benchmark futures.
Malaysian palm oil futures down
Dalian’s most-active soyoil contract gained 0.38%, while its palm oil contract and soyoil prices on the Chicago Board of Trade were largely flat.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
An agribusiness consultancy on Friday raised the forecast for Brazil’s 2023/2024 soybean crop, while another cut its projection, suggesting difficulties in estimating soybean output.
The Malaysian ringgit, palm’s currency of trade, strengthened 0.36% against the dollar.
A stronger ringgit makes palm oil less attractive for foreign currency holders.
Market participants will pay close attention to any policy signals from an annual meeting of China’s parliament beginning on Tuesday, where it is expected to unveil moderate stimulus plans. China is the second largest palm oil buyer after India.
Malaysia’s palm oil stocks are expected to drop below 2 million tons for the first time in six months at the end of February, with output likely to drop for a fourth consecutive month, a Reuters survey showed.
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