Malaysian palm oil futures slipped further on Wednesday as soybean oil on the Chicago and Dalian exchanges declined, while a lack of firm export trends kept traders on the sidelines.
The Bursa Malaysia Derivatives' August crude palm oil contract fell 0.18% to 4,527 Malaysian ringgit ($1,106.28) per metric ton. The September contract dropped 0.20% to 4,565 ringgit/mt.
AmSpec Agri Malaysia reportedly estimated a 0.9% month-over-month decline in Malaysia's July 1-20 shipments. At the same time, Intertek Testing Services approximated a 4.1% rise.
"..the data divergence is notable, casting doubt on the sustainability of export momentum," price reporting agency MySteel said.
In June, exports rebounded month over month but fell below the previous year's level, "due to softer oils and fats consumptions in major markets such as China and India amid the lingering impact of the West Asia conflict," according to the Malaysian Palm Oil Council.
"...near-term vegetable oil demand remains moderate across major importing countries," it said, noting the currently high stock levels in India, driven by weak demand due to inflationary pressure.
Going forward, the market could see a recovery in Indian demand ahead of the Diwali festival and could receive some boost from Indonesia's 50% palm-based biodiesel blending and potential yield impact from the El Nino weather phenomenon.
However, "although the development of El Nino suggests future production reduction risks, current fundamental pressures are significant, and a breakout trend is unlikely in the short term," MySteel said.
The MPOC projects palm oil prices to trade between 4,400 ringgit/mt and 4,650 ringgit/mt in August, but soft demand and elevated inventories will likely cap further upside.