MARKET DEVELOPMENT
Palm oil closes at record high on concern over shrinking supply
Palm oil closes at record high on concern over shrinking supply
12.01.2022 (www.theedgemarkets.com) - (Jan 12): Palm oil ended at a record high on Tuesday (Jan 11) as poor supplies because of flooding and labour shortages in second-biggest grower Malaysia outweighed concerns over weaker demand.
The tropical oil, used in everything from cooking oil to ice cream and detergent, jumped 0.9% to RM5,072 a ton, surpassing its previous record close of RM5,071 set in October.
“Despite the weaker demand for Jan 1-10 capping prices, palm oil is still supported by weather uncertainties and labour shortages in the first quarter, as well as a much lower inventory carry-over from December,” said Marcello Cultrera, an institutional sales manager and broker at Phillip Futures in Kuala Lumpur. “January palm supply is expected to further decrease as buyers in destination markets start restocking.”
Malaysian stockpiles shrank 12.9% to 1.58 million tons in December from the previous month, according to official data from the Malaysian Palm Oil Board Monday, compared with 1.7 million tons estimated in a Bloomberg survey.
That’s as production tumbled the most in 11 months to 1.45 million tons.
An industry estimate showing output in Malaysia’s southern peninsula dropped 32% during in the first 10 days of January from a month earlier also supported the market, said Anilkumar Bagani, research head of Mumbai-based Sunvin Group.
Dwindling demand, however, may put pressure on the market. Cargo surveyor SGS Malaysia reported shipments plunged 41% in the first 10 days of January from a month earlier as exports to China and Europe slumped.