MARKET DEVELOPMENT
Palm oil hits four-month low on higher export and output outlook
Palm oil hits four-month low on higher export and output outlook
16.06.2022 (www.theedgemarkets.com) - (June 16): Palm oil slumped to its lowest level since the middle of February on expectations of rising shipments from top grower Indonesia and expanding output in Malaysia.
Futures for August delivery dropped as much as 3.3% to RM5,467 per ton, before closing at RM5,542. The world’s most-consumed cooking oil has fallen more than 20% since an all-time closing high at the end of April.
“Sentiment seems to be very negative and more downside in palm oil prices is expected going forward,” said Gnanasekar Thiagarajan, head of trading and hedging strategies at Kaleesuwari Intercontinental. Palm oil’s supplies from Indonesia are rising and production is likely to increase in Malaysia due to improved weather conditions, he said.
Indonesia has slashed the maximum crude palm oil export levy by nearly half in another step to speed up shipments after lifting a temporary export ban on the commodity last month. The nation is working to “flush out” its overflowing stockpiles of palm oil.
“Pipelines are dry in top buyer India, but no major buying is expected as the seasonal demand will begin only in September ahead of major festivals such as Diwali. Bargain buying could take place from time to time, but that’s unlikely to lift prices,” Thiagarajan said.