Palm oil futures rebound on soyoil gains, May output forecast
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After five consecutive sessions of losses, Malaysian palm oil futures edged higher on Tuesday, lifted by gains in Chicago soyoil and shifting attention toward May's production potential.
The benchmark July contract on the Bursa Malaysia Derivatives Exchange rose 6 ringgit, or 0.16%, reaching 3,833 ringgit per metric ton by the midday break. According to Anilkumar Bagani, head of research at Sunvin Group, the futures opened lower but gradually recovered as market expectations had already absorbed April’s high production figures. Focus is now transitioning to May’s output and its implications for supply dynamics.
In parallel markets, Dalian's most-active soyoil contract declined 0.21%, while its palm oil equivalent dropped 0.89%. Meanwhile, soyoil on the Chicago Board of Trade gained 0.33%, offering support to palm due to the strong correlation between edible oils competing in the global market. The uptick in Chicago soyoil prices was a key driver behind palm's resilience amid weakness in Asian contracts.
Currency movements also contributed to the price support. The Malaysian ringgit weakened 0.79% against the U.S. dollar, enhancing the competitiveness of palm oil for foreign buyers and providing additional tailwind to prices.
The broader commodity complex saw oil prices bounce more than 1% on Tuesday, recovering from prior losses following OPEC+’s announcement to accelerate output increases. Despite ongoing concerns over potential market surplus, the rebound in crude oil futures improves palm’s attractiveness as a biodiesel feedstock, reinforcing demand-side fundamentals.
From a technical perspective, palm oil may retest support at 3,765 ringgit. A decisive break below this level could expose further downside toward 3,702 ringgit, according to Reuters analyst Wang Tao. Traders should closely monitor this range as it could define the near-term trend.
In conclusion, the slight recovery in palm oil futures reflects a recalibration of market expectations, influenced by developments in related edible oil markets, currency shifts, and energy prices. Going forward, May’s production figures and support levels near 3,765 ringgit will be crucial in determining market direction.
The benchmark July contract on the Bursa Malaysia Derivatives Exchange rose 6 ringgit, or 0.16%, reaching 3,833 ringgit per metric ton by the midday break. According to Anilkumar Bagani, head of research at Sunvin Group, the futures opened lower but gradually recovered as market expectations had already absorbed April’s high production figures. Focus is now transitioning to May’s output and its implications for supply dynamics.
In parallel markets, Dalian's most-active soyoil contract declined 0.21%, while its palm oil equivalent dropped 0.89%. Meanwhile, soyoil on the Chicago Board of Trade gained 0.33%, offering support to palm due to the strong correlation between edible oils competing in the global market. The uptick in Chicago soyoil prices was a key driver behind palm's resilience amid weakness in Asian contracts.
Currency movements also contributed to the price support. The Malaysian ringgit weakened 0.79% against the U.S. dollar, enhancing the competitiveness of palm oil for foreign buyers and providing additional tailwind to prices.
The broader commodity complex saw oil prices bounce more than 1% on Tuesday, recovering from prior losses following OPEC+’s announcement to accelerate output increases. Despite ongoing concerns over potential market surplus, the rebound in crude oil futures improves palm’s attractiveness as a biodiesel feedstock, reinforcing demand-side fundamentals.
From a technical perspective, palm oil may retest support at 3,765 ringgit. A decisive break below this level could expose further downside toward 3,702 ringgit, according to Reuters analyst Wang Tao. Traders should closely monitor this range as it could define the near-term trend.
In conclusion, the slight recovery in palm oil futures reflects a recalibration of market expectations, influenced by developments in related edible oil markets, currency shifts, and energy prices. Going forward, May’s production figures and support levels near 3,765 ringgit will be crucial in determining market direction.