Palm Oil Steady After December Data

Malaysian palm oil futures hovered above MYR 4,600 per tonne, continuing their bullish momentum and notching a two-week high, lifted by a weaker ringgit and stronger exports. Cargo surveyors noted that palm oil shipments during June 1–15 rose between 9.6% and 23.8% from the same period in May. Meanwhile, imports by top buyer India are expected to exceed 600,000 tonnes in June after edging up to 549,356 tonnes in May. Expectations of lower production due to the lingering effects of El Niño also continued to support prices. In Indonesia, the world's largest palm oil producer, the B50 biodiesel mandate is set to take effect on July 1 after fuel tests delivered positive results, boosting the domestic demand outlook. Contracts are also on track to end the week over 3% higher, with sentiment further supported by the Malaysian Palm Oil Council's forecast that prices will hold between MYR 4,400 and MYR 4,650 in July. However, holidays in the Dalian and Chicago markets limited further upside.

Malaysian palm oil futures fell below MYR 4,500 per tonne, reversing the previous strong rally, as trading resumed after a holiday. Sentiment was pressured by weaker edible oil prices on the Dalian and Chicago markets. A sharp decline in crude oil prices added to the downside after the U.S. and Iran signed an interim agreement aimed at ending hostilities and reopening the Strait of Hormuz, reducing support from the biofuel sector. Meanwhile, Malaysia lowered its July crude palm oil reference price, keeping the export duty unchanged at 10%. Still, losses were limited by a weaker ringgit and expectations of lower production due to the lingering effects of El Niño. Demand prospects also remained supportive after cargo surveyors reported that palm oil exports during June 1–15 rose between 9.6% and 23.8% from the same period in May. In top buyer India, imports are expected to exceed 600,000 tonnes in June after edging up to 549,356 tonnes in May, according to local traders.

Malaysian palm oil futures climbed about 1.7% to above MYR 4,500 per tonne, reversing losses in the previous two sessions as a weaker ringgit and firmer palm oil prices on the Dalian exchange boosted sentiment. Support also came from stronger exports, with cargo surveyors noting that palm oil shipments during June 1–15 rose between 9.6% and 23.8% from May. Simultaneously, El Niño is expected to reduce Malaysian palm oil yields by 8%–10% this year. However, gains were capped by weaker rival edible oils on Chicago markets. Meanwhile, Malaysia has cut its July crude palm oil reference price to a level that keeps the export duty unchanged at 10%. In top buyer India, palm oil imports edged higher in May from April's four-month low but remained below normal levels. Analysts view the rally to lose momentum, citing the prospect of lower crude oil prices following the U.S.-Iran peace deal and weaker consumer spending in China, a key consumer. Markets will be closed Wednesday for a holiday.