MARKET DEVELOPMENT
Palm extends gain on crude oil strength, tight stock outlook
Palm extends gain on crude oil strength, tight stock outlook
06.04.2022 (www.hellenicshippingnews.com) - Malaysian palm oil futures climbed for a second straight session on Tuesday, lifted by strength in crude oil futures and as surveys indicated tight end-March inventories in the world’s second largest producer.
The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange rose 146 ringgit, or 2.57%, to 5,838 ringgit ($1,385.71) a tonne by the midday break.
The overall commodity market is seen to be moving in bullish direction as of now, as stronger crude oil will support higher palm oil prices, said Mohsin Mohammad, director at Selangor-based cooking oil exporter Sarafiah Natural Resources.
Demand is expected to pick up in May and June when prices move downwards, but that might lead to a shortfall at destinations due to the month of Ramadan, he said.
Production in Malaysia is expected to pick up in the coming months as the weather improves.
Malaysia’s production in March was seen expanding 16.4% month-on-month to a three-month peak of 1.32 million tonnes, a Reuters survey showed on Monday.
However, rising exports and lower imports likely offset production, keeping end-March inventories tight at 1.53 million tonnes – a 0.5% uptick from the previous month, according to the survey.
Exports during April 1-5 fell 45% to 107,980 tonnes from the same week in March, cargo surveyor Intertek Testing Services said.
Oil futures extended gains as the United States and Europe planned new sanctions to punish Moscow over alleged war crimes by Russian troops in Ukraine, adding to concerns about supply disruptions.
Stronger crude futures make palm a more attractive option for biodiesel feedstock.
Soyoil prices on the Chicago Board of Trade BOcv1 rose 0.6% after a 1.6% gain overnight. The Dalian exchange was closed for a public holiday.
“Rising inflation and the ongoing war (in Ukraine) have not brought commodity prices to peak levels, which gives room for further upward movement, especially in the energy and agri commodity sectors,” Mohsin said.
Palm oil may gain more into a range of 5,855-5,966 ringgit per tonne, as suggested by a projection analysis, Reuters technical analyst Wang Tao said.
Source: Reuters (Reporting by Mei Mei Chu; Editing by Subhranshu Sahu)
Source: Reuters (Reporting by Mei Mei Chu; Editing by Subhranshu Sahu)