May 31, 2023 (MLN): The benchmark palm oil contract fell significantly by 3.59% to 3281 ringgit a tonne.
This decline comes after the benchmark declined yesterday by 4.03%.
Notably, the contract rose 2.24% last week due to concerns over unfavorable EL Nino weather patterns, but all gains were lost on just the first day of this week.
Dalian's most-active soyoil contract DBYcv1 fell 4.11%, while its palm oil contract DCPcv1 was down 4.39%, as reported by Reuters.
Additionally, according to cargo surveyor Intertek Testing Services, exports of Malaysian palm oil products for May 1-25 fell by 0.7% MoM from the earlier corresponding month.
May production is expected to rise between 20% and 30% from April, rebounding from the lows seen during the Raya holidays, analysts said.
The decline in palm oil prices might also be attributed to the latest U.S. inflation data that came in higher than expected and market participants are now pricing in another interest rate hike.
Tony Sycamore, IG’s Sydney-based analyst expressed concerns by saying “Higher U.S. rates are a headwind for crude oil demand.”
Additionally, palm oil is also affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Malaysian palm oil is currently at its lowest level last seen since September 2022.
