Palm oil prices resumed their downward direction on Wednesday after having gained on the first two days of the week following the suspension of production by some Malaysian producers. The edible oil also gained as soyabean oil prices increased on the Chicago Board of Trade during the weekend. However, the downward pressure on palm oil, which is ruling at a sixmonth low is likely to continue due to high inventories and the oncoming production season, traders said.
Palm oil is caught between rising global supplies and weak export demand from Malaysia. Indonesia also plans to boost its palm oil in the export market further. It has given permission to ship out 1.7 million tonnes (mt) till June 24. Wednesday’s downward movement also followed efforts by Malaysian authorities to convince the millers to resume palm oil production and buy fresh fruit bunches (FFB) of oil palm.
Traders said the premium for palm oil delivered for cash over the futures has declined around 150 MYR. This drop is a cause for concern for the refineries, forcing them to suspend operations. According to the Malaysian Palm Oil Council (MPOC) market intelligence, the share of soft oils such as soyabean oil and sunflower oil had increased to 47 percent in India.
Imports of soft oil gained at the cost of palm oil in May as Indonesia stopped exports of palm oil. The Indian government, on the other hand, has allowed import of 2 mt each of sunflower oil and soyabean oil dutyfree for two years to June 2024.
