Malaysian palm oil futures eased further on Thursday due to a lack of bullish market drivers, with both crude oil and rival soybean oil declining from the previous session's levels.
The Bursa Malaysia Derivatives' August crude palm oil contract edged lower by 0.57% to 4,504 Malaysian ringgit ($1,103.87) per metric ton. The September contract slipped 0.59% to 4,542 ringgit/mt.
Prices declined despite preliminary reports that Malaysia's July 1-15 shipments grew between 4% and 12.4% from a month earlier.
A strengthening local currency, however, is dampening export competitiveness, due to resulting higher cargo prices for international buyers.
Demand has remained relatively subdued and there has been no significant change in market sentiment, as uncertainties have arisen from geopolitical tensions in the Middle East, Reuters reported, citing Paramalingam Supramaniam, director of a Selangor-based brokerage.
Malaysia has kept the export duty for crude palm oil at 10% in August, as reference price rose to 4,412.19 ringgit/mt from the prior month's 4,346.79 ringgit/mt, according to a notification from the Malaysian Palm Oil Board.
In Indonesia, exports reportedly dropped 25.1% year over year to around 2.0 million metric tons in May, media outlets reported, citing Indonesian palm oil association Gapki.
Analysts expect that the country's exportable supplies will further decline following the implementation of a higher 50% palm-based biodiesel blending mandate on July 1.
The palm oil market is expected to remain supported in H2 as B50 progresses and as yields decline toward the year-end through 2027 due to a developing El Nino weather phenomenon.
As prices rise, the Indonesian government will consider imposing sanctions on companies buying fresh fruit bunches at cheap rates, the Jakarta Globe reported.
The move is aimed at ensuring that farmers receive fair prices, following reports that there is a disconnect between global prices and farmgate prices.