The benchmark May contract on the Bursa Malaysia Derivatives ended MYR111 lower at MYR3,584 a metric ton, off an intraday high of MYR3,665/ton.
Crude oil’s retreat after rallying in the last few sessions weighed on palm oil prices.
Palm oil prices also fell tracking soybean futures as expectations of rains in Argentina might mean that the crop will likely receive a good dose of moisture ahead of the upcoming harvest.
CBOT soyoil for May delivery settled 0.6% lower at 59.10 cents a pound; the contract was trading 71 points lower at 58.39 cents around 1015 GMT in screen trade.
The prospects for improving weather and palm oil’s output growth to gain traction for the rest of the year will pressure prices, Howard Sargeant, chief executive, palm plantations division, of the Jakarta-based PT Bakrie Sumatera Plantations said in an interview Monday.
“CPO prices will be going south in the second half. But for now until June, prices may hover in the MYR3,500-MYR3,600/ton range, supported by high energy prices due to escalating tension (in the Middle East and North Africa),” he said.
However, Anne Frick, an analyst at Prudential Bache Commodities LLC, said prices are likely to respond in the coming months to tightening palm oil stocks, even if production in Malaysia, the world’s second-largest producer, picks up.
“A rally to MYR4,000/ton is possible in the first half of 2010,” Frick said on the sidelines of the palm oil conference Tuesday. “However, I expect palm oil, which has been a leader in the bull market, will turn the upside price leadership over to soyoil in the second half of the year.”
In the cash market, refined palm olein for July, August, September shipment was traded at $1,195/ton, free on board Malaysian ports, a Singapore-based physical market broker said.
Cash CPO for prompt shipment was offered MYR110 lower at MYR3,660/ton.
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