Palm oil prices ended the Asian trading session lower on Monday

Palm oil prices closed lower in the Asian trading session but remained elevated. Nomura analysts Raghavendra Diwekar and Amol Dongre wrote in a note that palm oil prices will likely be supported this week by a weaker ringgit and declining inventories in Malaysia. The average palm oil price this week could be around 4,700 ringgit, although a de-escalation of the Middle East conflict and lower oil prices could push them below 4,600 ringgit per tonne, the analysts believe.

Malaysian palm oil futures fell slightly on Monday as profit-taking weighed on the market, although export restrictions on crude palm oil in Thailand limited the decline.

The benchmark June palm oil contract FCPO1 on the Bursa Malaysia Derivatives Exchange fell 27 ringgit, or 0.56%, to 4,812 ringgit (US$1,195.53) per metric tonne at the close.

Some profit-taking was observed as most of the bullish factors had already been priced in, leaving the market without new guidance, said Anilkumar Bagani, head of commodity research at Sunvin Group, a Mumbai-based brokerage.

However, according to Bagani, the market recovered slightly from the initial decline as news of Thailand’s crude palm oil export restrictions began to spread.

Thailand’s Commerce Ministry said it would tighten crude palm oil exports and control bottled palm oil prices starting April 7, as demand for biodiesel rises due to a sharp rise in global fuel prices triggered by the Middle East conflict.

Oil prices fell more than $2 in volatile trading as investors awaited clarity on the status of US-Iran negotiations and remained concerned about continued supply losses due to shipping disruptions.

Weaker oil futures make palm oil a more attractive biodiesel feedstock option.

Soybean oil prices on the Chicago Mercantile Exchange rose 0.07%. The Dalian Commodity Exchange was closed for a public holiday.

Palm oil prices follow those of competing edible oils as it fights for share in the global vegetable oil market.

According to a Reuters poll, Malaysia’s palm oil inventories likely fell by the most in three years in March, reaching their lowest level since July last year, as a sharp rise in exports more than offset a modest increase in production.

The ringgit, the palm oil trading currency, strengthened 0.07% against the dollar, making the commodity slightly more expensive for buyers holding foreign currency.

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