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Palm oil prices fall due to a projected buildup of stocks and weaker rival oils

Malaysian palm futures fell on Wednesday, as the market anticipated that stocks would rise for a third consecutive month in the month of May. They were also pressured by the declines in edible oils on Chicago and Dalian.

By midday, the benchmark contract for palm oil delivery in August on the Bursa Derivatives Market had fallen 8 ringgit (0.2%), to $3,926 ringgit (US$923.11) per metric ton.

A Kuala Lumpur based trader stated that "if end stocks rise, this will pressure palm oil futures price, which is why the markets are down."

A survey on Wednesday showed that Malaysian palm oil inventories will rise for the third month in a row in May. This is due to a modest increase in production, despite strong export demand.

AmSpec Agri Malaysia, an independent inspector, estimated that exports of palm oil products from Malaysia had risen by 13.2% in the month of May. Cargo surveyor Intertek Testing Services predicted a 17.9% increase.

Dalian's palm oil contract fell 0.88%, while the most active soyoil contract decreased 0.03%. Chicago Board of Trade soyoil prices fell by 0.45%.

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

In May, India's imports of palm oil reached a six-month record.

The price of oil fell in Asian trade due to concerns over rising OPEC+ production and tensions on tariffs, which threaten global economic prospects. However, worries about Canadian supplies provided a floor.

Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.

The palm ringgit's trade currency strengthened by 0.31% to the dollar. This made the commodity slightly cheaper for buyers who hold foreign currencies.

Technical analyst Wang Tao stated that palm oil could retest the resistance level of 3,968 Ringgit per metric tonne. A break above this would lead to an increase to 3,998 Ringgit.

(source: Reuters)