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Palm oil closes higher on output concerns
calendar06-02-2024 | linkHellenic Shipping News | Share This Post:

06/02/2024 (Hellenic Shipping News) - Malaysian palm oil futures reversed early losses and snapped a four-session losing streak to close higher on Monday, with concerns of lower January output and a weaker ringgit underpinning the market.


The benchmark palm oil contract FCPOc3 for April delivery on the Bursa Malaysia Derivatives Exchange gained 35 ringgit, or 0.93%, to 3,799 ringgit ($800.13) at closing.


The contract opened the day lower tracking Chicago Board of Trade (CBOT) soyoil and Chinese vegetable oil futures.


However, it was seen erasing the early losses quickly as preliminary estimates showed a decline in Malaysian palm oil stocks amid a near double-digit fall in production and plummeting exports in January, said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.


“We estimate that the stocks are expected to show a decline of 6% as production is estimated to have fallen by 9%, while exports performed poorly by declining 9.3% from December,” Bagani said.


Malaysia’s palm oil stocks likely fell for three straight months to the end of January, in line with seasonal low production in the world’s second biggest palm oil producer, a Reuters survey showed on Monday.


Palm oil stocks are seen falling to 2.14 million metric tons, down 6.62% from December, according to ten traders, planters and analysts polled by Reuters. Crude palm oil output was seen at 1.37 million tons in January, an 11.83% decline from the previous month.


The Malaysian Palm Oil Board (MPOB) is scheduled to release its monthly data on Feb. 13.


India’s palm oil imports fell to a three-month low in January, as refiners increased buying of rival soyoil due to negative refining margins for crude palm oil (CPO), five dealers told Reuters on Monday.


The ringgit MYR=, palm’s currency of trade, fell 0.7% against the dollar, making the commodity less expensive for buyers holding the foreign currency.


Dalian’s most-active soyoil contract DBYcv1 fell 0.75%, while its palm oil contract DCPcv1 lost 0.37%. CBOT soyoil prices BOcv1 were up 0.49%.


Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.


Oil prices nudged higher on Monday, recovering from sharp falls last week, after Washington pledged to launch further strikes on Iran-backed groups in the Middle East and as Ukrainian drones struck southern Russia’s largest refinery.


Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.


Source: Reuters