Palm oil climbs to 12-day closing high on flood-led supply woes
22/12/2022 (Hellenic Shipping News) - Malaysian palm oil futures jumped on Wednesday to hit a 12-day closing high as concerns over flood-related supply disruptions in the world’s second-largest producer lifted prices.
The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange closed up 91 ringgit, or 2.35%, to 3,60 ringgit ($81.19) a tonne.
“Prices are juxtaposed between bullish fundamentals and worsening demand,” said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
Millers and planters are grappling with lower production and deteriorating oil conditions due to floods, while aggressive offers from larger rival Indonesia is hampering demand for Malaysian palm oil, Paramalingam said.
More than 72,000 people have been displaced this week as flooding worsened across several states in Malaysia, the world’s second-largest palm oil producer, with heavy rains expected to persist until the year-end.
Exports from Malaysia during Dec. 1-20 fell 4.5% from the previous month to 952,592 tonnes as shipments to China stalled, according to data by cargo surveyor ITS.
India’s market regulator extended the suspension of trading in derivative contracts of key farm commodities, including palm oil and soy oil, by a year as the world’s biggest importer of vegetable oils tries to tame food inflation.
Dalian’s most-active soyoil contract rose 0.3%, while its palm oil contract gained 0.6%. Soyoil prices on the Chicago Board of Trade rose 0.7%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Crude oil prices rose after data suggested a larger-than-expected draw in U.S. crude stockpiles, but gains were capped by growing concerns over demand in China and a snow storm that is expected to hit U.S. travel.
Stronger crude makes palm a more attractive option for biodiesel feedstock.
Source: Reuters (Reporting by Mei Mei Chu; Editing by Uttaresh.V and Shounak Dasgupta)