MARKET DEVELOPMENT
VEGOILS-Palm falls for fourth day as China's COVID surge stokes demand worries
VEGOILS-Palm falls for fourth day as China's COVID surge stokes demand worries
15.03.2022 (www.nasdaq.com) - By Mei Mei Chu
KUALA LUMPUR, March 15 (Reuters) - Malaysian palm oil futures fell sharply on Tuesday, extending losses to a fourth session, as surging COVID-19 cases in key buyer China raised worries about demand amid expectations of higher domestic production.
The benchmark palm oil contract FCPOc3 for May delivery on the Bursa Malaysia Derivatives Exchange slid 3.24% to 6,155 ringgit ($1,463.39) a tonne by the midday break.
Palm prices are under pressure with speculative selling at current levels and negative sentiment in both Chicago and Dalian, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
"Albeit the better-than-expected exports in March, the production increase is almost above 25% for the first 10 days of March," Paramalingam said.
Investors were also closely watching for policy changes in Indonesia after the world's top producer expanded a rule requiring companies to sell 30% of their planned exports domestically.
China reported a steep jump in daily COVID infections on Tuesday, with new cases more than doubling from a day earlier to a two-year high as a virus outbreak expanded rapidly in the country's northeast.
Dalian's most-active soyoil contract DBYcv1 fell 1.34%, while its palm oil contract DCPcv1 was down 5.39%. Soyoil prices on the Chicago Board of Trade BOcv1 declined 0.99%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Oil prices slid to a two-week low on continued ceasefire talks between Russia and Ukraine, making palm a less attractive option for biodiesel feedstock. O/R
Palm oil may retest a support at 6,104 ringgit per tonne, with a good chance of breaking below this level and falling towards 5,744 ringgit, Reuters technical analyst Wang Tao said. TECH/C
($1 = 4.2060 ringgit)
(Reporting by Mei Mei Chu; Editing by Subhranshu Sahu)