PALMOILMAGAZINE, SINGAPURA – The contract price for Crude Palm Oil (CPO) at the Malaysia Derivatives Exchange experienced a decline on Tuesday (10/24/2023), primarily due to the abundant soybean oil harvests in the United States.
The strengthening of the Malaysian ringgit, while some increased purchasing activity limited the extent of the price drop, also played a role.
According to Reuters, the CPO contract price for January 2024 delivery (FCPOc3) at the Malaysia Derivatives Exchange decreased by RM 74 per ton, approximately 2%, settling at RM 3,679 (equivalent to US$ 770.15) per metric ton during the early trading session. This marked the second consecutive decline in prices.
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The soybean oil harvest in the United States significantly contributed to the oversupply of seed oil and its derivatives. Data from the U.S. Department of Agriculture, released on Monday, revealed that American farmers had already harvested a quarter of soybean plantations and 59% of corn plantations on the preceding Sunday.
These figures aligned with trade expectations, which anticipated levels above the five-year average for a single planting cycle.
Simultaneously, the Malaysian ringgit (MYR), the official currency for palm oil trade, strengthened by 0.3% against the US dollar. This rise made palm oil less appealing for foreign currency traders, although increasing demands for palm oil mitigated more significant losses.
Data from AmSpec Agri Malaysia and Intertek Testing Services indicated that palm oil exports from Malaysia between October 1 and October 20 were likely to increase by a range of 7.9% to 9.9% compared to the previous month.
Additionally, data from Reuters indicated that soybean oil contracts at Dalian (DBYcv1) fell by 1.5%, CPO contracts (DCPcv1) dropped by 1.7%, and soybean oil prices at the Chicago Board of Trade (BOcv1) reached their lowest point in the past four months with a 1.1% decrease.
The dynamics of palm oil prices are intertwined with those of other vegetable oils as they compete for a share of the global vegetable oil trade. (T2)
