Malaysian palm oil futures experienced a reversal of fortune on Tuesday, closing lower after initial morning gains. The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange settled at 3,863 ringgit a metric ton, marking a 1.48% decrease or 58 ringgit less than the previous close.
Several factors contributed to this downturn. Weaker export data for Malaysian palm oil products during the first 20 days of May, coupled with projections of a significant rise in production, dampened market sentiment. However, the overnight losses in soy oil prices on the Chicago Board of Trade (CBOT) played a crucial role in exerting downward pressure, as palm oil and soy oil prices often move in tandem. The 1.58% decline in CBOT soyoil at the time of reporting mirrored the broader weakness in commodity markets, with crude oil prices also experiencing a 1.93% drop.
Analysts anticipate that Malaysian palm oil prices will remain subdued in the near term due to the combination of increased production and decreased exports. However, the potential for further declines in soy oil prices could intensify this downward pressure, leading to a more significant slump in palm oil futures.
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