Palm up on positive export estimates, expectations of weak output
21/10/2024 (Business Recorder), Kuala Lumpur - Malaysian palm oil futures closed up on Monday, rebounding after two sessions of losses, supported by higher export estimates and anticipated seasonal palm production declines.
The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange gained 46 ringgit, or 1.08%, to 4,301 ringgit ($1,000.23) a metric ton at the close.
The contract fell 1.3% in the last two consecutive sessions.
Palm prices today are reacting towards better export estimates and expectations of weaker output in the coming weeks in line with seasonal weakness, said David Ng, a proprietary trader at Kuala Lumpur-based trading firm Iceberg X Sdn Bhd.
Cargo surveyors estimate exports of Malaysian palm oil products rose between 8.7% and 9.5% during Oct. 1-20, compared with the same period a month ago.
The Malaysian Palm Oil Board (MPOB) reported earlier this month that crude palm oil production was down 3.8% in September from August, while palm oil exports rose 0.93%.
Dalian’s most-active soyoil contract fell 0.92%, while its palm oil contract shed 0.89%. Soyoil prices on the Chicago Board of Trade were up 1.2%.
Palm oil tracks prices of rival edible oils as they compete for a share of the global vegetable oils market.
Oil prices regain some ground after 7% loss last week
Oil prices were broadly steady, following a more than 7% drop last week on worries about demand in China, the world’s top oil importer, and an easing of concerns about potential supply disruptions in the Middle East.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
The ringgit, palm’s currency of trade, strengthened 0.05% against the U.S. dollar, making the commodity more expensive for buyers holding foreign currencies.
Malaysia plans to raise the threshold for a windfall profit levy (WPL) on palm oil and will revise the export duty for crude palm oil, Prime Minister Anwar Ibrahim said.
A higher WPL will reduce the pressure of the increase in the cost of palm oil production, MPOB said, according to state news agency Bernama, while export tax adjustments will help the palm oil refining industry get similar advantages compared to Indonesia in the downstream segment, Glenauk Economics said.