MUMBAI: Malaysian palm oil futures are likely to extend their decline and trade near a two-year low of RM3,500 per metric ton from June to November as recovery in production leads to a stock build, industry analyst Dorab Mistry said on Wednesday.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange lost 38 ringgit, or 1%, to 3,754 ringgit a metric ton by the midday break. They hit a more than two-year high of 5,202 ringgit in November.
"Palm oil stock-build has commenced. Supplies look plentiful especially as production picks up from now," Mistry told an industry conference in Dubai.
Palm oil production usually rises in top two producers, Indonesia and Malaysia, in the second half of the year.
Palm oil's premium over rival soyoil in recent months led to a loss of market share. However, palm oil has now become slightly competitive and must maintain this competitiveness to recover its market share, he said, referring to the recent fall in prices.
In India, a top palm oil importer, the share of palm oil in the country's vegetable oil imports fell to 43% during November to March, compared to 61% a year ago, according to data compiled by industry body Solvent Extractors' Association of India.
U.S. soyoil futures are expected to remain strong due to rising demand from the local biofuel industry, following Indonesia's restriction on exports of used cooking oil and palm oil mill effluent, which were previously used for biofuels, Mistry said.
India's vegetable oil imports in 2025 are likely to fall from a year ago as the crushing of oilseeds, especially rapeseed, gains momentum due to export demand for rapeseed meal, he said.
China has been raising Indian rapeseed meal purchases after Chinese authorities imposed a 100% retaliatory tariff on Canadian imports. - Reuters
