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Malaysian CPO Futures Drop Amid Weak Demand, Stronger Ringgit

22 Jan 2025 4:30 pm
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MUMBAI, 22 Jan (Commoditiescontrol): Malaysian crude palm oil (CPO) futures declined on Wednesday, ending a three-session rally due to weak export demand and a stronger Malaysian ringgit.

The benchmark April palm oil contract on the Bursa Malaysia Derivatives Exchange fell by 52 ringgit, or 1.22%, to close at 4,208 ringgit ($949.24) per metric ton. This decline followed reports from cargo surveyors Intertek Testing Services and AmSpec Agri Malaysia, which showed that palm oil exports between January 1 and 20 dropped by 18.2% to 23%, indicating lower demand in major export markets.

Adding to the downward pressure, the Malaysian ringgit appreciated by 0.89% against the U.S. dollar, making palm oil more expensive for international buyers. Freight sentiment for vessels carrying palm oil cargoes within Asia also remained weak, reflecting sluggish export activity.

In the global vegetable oils market, trends were mixed. While Dalian’s most-active soyoil contract gained 0.03%, its palm oil contract dropped by 1.02%. On the Chicago Board of Trade, soyoil edged down by 0.22%. These fluctuations highlight palm oil’s sensitivity to price movements in competing edible oils, as they vie for a share of the global market.

Despite the current challenges, Malaysian palm oil futures are expected to perform better in 2025 compared to last year. This optimistic outlook is bolstered by Indonesia’s increased palm oil-based biodiesel consumption, driven by government subsidies. However, competition from cheaper alternatives in the vegetable oil market may limit the upside potential.

Notably, Indonesia’s palm oil fund agency has resumed disbursements for biodiesel subsidies and oil palm replanting programs after a temporary suspension during a reorganization. This move is expected to strengthen demand for palm oil in the biodiesel sector, potentially influencing future price trends.

Meanwhile, China’s total stocks of major vegetable oils—soybean oil, palm oil, and rapeseed oil—declined during the week ending January 17, according to the China National Grain and Oils Information Centre (CNGOIC). The reduction was primarily due to lower palm oil volumes, although increases in rapeseed oil stocks partially offset the decline.

With export challenges and currency fluctuations continuing to impact the market, the outlook for Malaysian CPO remains finely balanced, presenting both risks and opportunities for stakeholders.



(By Commoditiescontrol Bureau; +91 98201 30172)


       
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