The war-driven rally in Brent crude has largely been erased, putting pressure on palm oil prices. Positive signals regarding peace talks between the US and Iran have pushed energy prices lower, while expectations for biofuel demand have also weakened.
Soybean oil prices traded in Chicago fell by 0.6 percent, further increasing selling pressure in the palm oil market. Palm oil production in Malaysia rose by 4.8 percent during the June 1-20 period compared to the previous month. In addition to the rise in production, the appreciation of the Malaysian ringgit has raised export costs, limiting external demand.
Market participants say the expanded palm-based biodiesel program expected to be launched by Indonesia next week will be decisive for the demand outlook. The decline in energy prices and rising production are strengthening the downward pressure on palm oil prices.