Kuala lumpur: Crude palm oil (CPO) futures on Bursa Malaysia Derivatives experienced a decline as trading closed lower on Thursday. This downturn was attributed to weaker soybean oil futures at the Chicago Mercantile Exchange (CME), which affected market sentiment.
According to BERNAMA News Agency, Sathia Varqa, a senior analyst at Fastmarkets Palm Oil Analytics, highlighted that the sharp losses in soybean oil futures were primarily due to significant declines in crude oil prices. He noted that the buying momentum for CPO futures gradually diminished towards the closing session, resulting in the first six contract months ending in negative territory, while contracts from March 2027 onward remained unchanged or marginally higher.
Anilkumar Bagani, the head of Commodity Research at the Mumbai-based Sunvin Group, pointed out that mixed palm oil production estimates, along with a lack of fresh demand due to palm oil's premium over soybean oil and its narrow spread against gas oil, led to cautious buyer behavior. He further mentioned that India, a major importer of palm oil, had imported nearly 1.57 million tonnes of edible vegetable oils in August, which further limited fresh demand for palm oil.
According to Anilkumar, the Malaysian Palm Oil Association (MPOA) estimated that production from August 1-20 was 1.08 percent higher than the July 1-20 period. Meanwhile, UOB Kay Hian estimated production to vary between three percent lower and one percent higher. In contrast, data from the South Peninsular Palm Oil Millers' Association (SPPOMA) indicated a decline in palm oil production in the southern peninsular region by nearly 4.7 percent during August 1-25 compared to the July 1-25 period.
At the close, several contracts experienced declines, including the September 2026 contract, which fell RM37 to RM4,593 per tonne, and the October 2026 contract, which declined RM45 to RM4,716 per tonne. Trading volume increased to 150,594 lots from 114,373, while open interest rose to 486,220 contracts from 348,842 contracts previously. Additionally, the physical CPO price for September South edged down by RM20 to RM4,620 per tonne.