Malaysian palm oil futures declined on Tuesday, closing down 58 ringgit or 1.48% at 3,863 ringgit ($822.26) per metric ton. The weaker performance was primarily driven by a drop in exports of palm oil products in May.
According to cargo surveyor Intertek Testing Services, exports of Malaysian palm oil products for May 1-15 fell 5.2% from the same period in April to 600,777 metric tons. Cargo surveyor Societe Generale de Surveillance (SGS) also estimates exports of Malaysian palm oil products for May 1-15 at 426,947 metric tons.
Anilkumar Bagani, research head at Sunvin Group, a Mumbai-based vegetable oil brokerage, said the weaker exports and expectations of a sharp rise in production also weighed on palm oil prices.
Additionally, Malaysia has maintained its June export tax for crude palm oil at 8% and lowered its reference price to 3,956.06 ringgit per ton for June, compared with May’s 4,273.93 ringgit.
Soyoil prices on the Chicago Board of Trade also fell 1.3%, further pressuring palm oil prices. Soybean harvesting in flood-hit Rio Grande do Sul state in Brazil reached 85% of the area, up from 78% last week, according to crop agency Emater.
Oil prices dropped by more than $1 on Tuesday, extending losses on investor expectations that lingering U.S. inflation could keep interest rates higher for longer, depressing consumer and industrial demand. Weaker crude oil futures typically make palm a less attractive option for biodiesel feedstock.
Despite the current decline, palm oil may rise into a range of 4,002-4,025 ringgit per metric ton, driven by a wave c, according to the report.