Palm slips due to export concerns and Indonesia's biodiesel plan

Malaysian palm futures declined on Wednesday, reversing gains made earlier, due to concerns over export demand and the uncertainty surrounding Indonesia's mandate for biodiesel.

At midday, the benchmark March palm oil contract on the Bursa Derivatives Exchange fell 32 ringgit or 0.73% to 4,333 Ringgit ($963.53) per metric ton.

A Kuala Lumpur based trader said that the price of crude palm oil has dropped as export worries continue to plague the market.

The data on palm oil exports from Malaysia for the period Jan. 1-10 will be released Friday. This follows December's data, which showed a decline between 2.5% to 7.8% in exports.

The trader said that the market was also waiting for more information regarding Indonesia's mandate on B40 biodiesel.

Last Friday, the Indonesia Energy and Mineral Resources minister signed a decree allocating 15,6 million kilolitres for distribution in 2025. The industry has until the end next month to adjust.

Dalian's palm oil contract, which is the most active contract, increased by 0.82%. The Chicago Board of Trade's (CBOT), which trades soyoil, saw a 0.7% increase in prices.

As palm oil competes to gain a share in the global vegetable oils industry, it tracks the price changes of competing edible oils.

The day's oil prices rose on tighter supply from Russia and OPEC, and data showing an increase in U.S. job openings indicated that economic activity was expanding and therefore the demand for oil would also grow.

Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.

The palm ringgit's currency, the U.S. Dollar, fell by 0.22%, making the commodity more affordable for buyers who hold foreign currencies.

Data published by the European Commission show that EU soybean imports for the 2024-25 season, which began in July, reached 6,96 million metric tonnes by January 5, an increase of 12% over the 6.22 million tones imported a year ago. EU palm oil imports dropped 18% on an annual basis to 1.52 millions tons.

Technical analyst Wang Tao stated that palm oil is neutral between 4,313-4.423, and a breakout could indicate a direction.

(source: Reuters)