VEGOILS-Palm sheds early gains after traders flag short-lived recovery
Reuters (23/06/2020) - KUALA LUMPUR, June 23 (Reuters) - Malaysian palm oil futures shed early gains on Tuesday as traders feared that the surge in demand and exports would eventually lose steam if there is a second wave of COVID-19.
The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange slipped 19 ringgit, or 0.78%, to 2,426 ringgit ($567.88) a tonne by the midday break, after rising as much as 0.86%.
Exports in June 1-20 rose between 55.3% and 57%, according to cargo surveyors, after an easing of coronavirus curbs and an export duty exemption.
However, the market lacks follow-up buying from destination markets such as China, Pakistan, Bangladesh and Europe to sustain the exceptionally strong June exports, said Anilkumar Bagani, research head of Mumbai-based vegetable oil broker Sunvin Group.
The Malaysian Palm Oil Council on Monday said exports are likely to increase further in the second half of the year, but a leading analyst cautioned that the global consumption of the edible oil would fall for the first time on record.
European Union palm oil imports in the 2019/20 season that started last July were down 11% at 5.55 million tonnes by June 21, official EU data showed.
Earlier in the session, markets were spooked by surprise comments from White House trade adviser Peter Navarro saying a hard-won U.S-China trade deal was “over”, although he later said his comments had been taken out of context.
Dalian’s most-active soyoil contract fell 0.21%, while its palm oil contract was down 0.39%. Soyoil prices on the Chicago Board of Trade dropped 0.75%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Palm oil may retreat moderately to a support at 2,408 ringgit, following its two failures to break a resistance at 2,479 ringgit per tonne, Reuters technical analyst Wang Tao said. ($1 = 4.2720 ringgit)