FX.co ★ Palm Oil Slips After Holiday Break

Malaysian palm oil futures slipped below MYR 4,500 per tonne, erasing their earlier strong gains as trading resumed after a holiday. Sentiment weakened in line with softer edible oil prices on the Dalian and Chicago exchanges. A sharp drop in crude oil prices further weighed on the market after the U.S. and Iran reached an interim agreement aimed at ending hostilities and reopening the Strait of Hormuz, thereby reducing support from the biofuel sector.

At the same time, Malaysia cut its July crude palm oil reference price while leaving the export duty unchanged at 10%. Downside pressure, however, was partly contained by a weaker ringgit and expectations of lower output due to the lingering impact of El Niño. Demand prospects also remained constructive after cargo surveyors reported that palm oil exports in June 1–15 were up between 9.6% and 23.8% from the same period in May. In key buyer India, imports are projected to exceed 600,000 tonnes in June, after inching up to 549,356 tonnes in May, according to local traders.