Palm oil futures in Malaysia fell more than 3% yesterday

October palm oil futures on Bursa Malaysia fell another 3.29% to a 6-month low of 3,788 ringgit/t, or $857.01/t yesterday, after last week's decline of 0.63%, amid a strengthening exchange rate ringgit and falling crude oil prices. The decline was exacerbated by yesterday's collapse of global stock markets, which negatively affected commodity prices.

 

Traders believe that lower crude oil prices, caused by a possible recession in the US, could reduce demand for palm oil, which is used in the production of biofuels. But the news about the slowdown in the US economy was offset by information about increased escalation in the Middle East - the world's main oil-producing region.

 

Brent crude futures fell 1.9% to $75.35/barrel, which could soon lead to a reduction in demand for palm oil. And the strengthening of the ringgit against the dollar by 1.67% makes palm oil less interesting for importers.

 

On the Dalian exchange, the most active soybean oil contract fell 0.39% and palm oil fell 0.23% yesterday, while soybean oil prices on the Chicago WTO fell 1.47%.

 

In general, September soybean oil futures in Chicago fell another 5.6% for the week to the lowest level since the end of 2020 at $903/t (-18.8% for the month).

 

Palm oil prices are highly dependent on the prices of other edible oils that compete with each other in the global vegetable oil market.

 

After a three-month increase, palm oil stocks in Malaysia are expected to decline in July (compared to the end of June) by 1.17% to 1.8 million tons, Reuters reports. At the same time, the production of palm oil increased by 12.7% to 1.82 million tons, and the export of products from it - by 26.1% to 1.52 million tons.

 

Declining palm and soybean oil prices are adding pressure to sunflower oil prices, which are flat despite tight end-of-season supplies.