MARKET DEVELOPMENT
Palm Retreats From Record on Signs Malaysian Output to Rebound
Palm Retreats From Record on Signs Malaysian Output to Rebound
05.05.2022 (www.bloomberg.com) - Palm oil retreated from a record high on optimism that Malaysian output will rebound, while the market is also on the lookout for signs that Indonesia will ease its controversial export ban.
Futures for July delivery fell nearly 5%, with the most-active, rolling contract posting its biggest daily drop since mid-March as markets reopened after the Eid holiday. Futures closed at an all-time high on Friday as Indonesia’s ban threatened to curb supplies.
The strong production season for crude palm oil in Malaysia should pick up with workers returning to plantations as the Ramadan season winds down, Avtar Sandu, senior manager for Asian commodities at Phillip Nova Pte Ltd., said in a note. Waning local demand for edible oils after the festive season may also provide a respite from surging prices, he said.
Indonesia’s ban on shipments of crude palm oil and cooking oil, and its chaotic implementation, stunned agricultural markets last week. The country accounts for about a third of the world’s edible oil exports, and the move will further squeeze a market that’s already reeling from Russia’s war in Ukraine.
There is speculation the prohibition will be short-lived, however. The Indonesian Vegetable Oil Industry Association said it expects the ban to be lifted later this month as domestic supplies recover and prices fall to the government-set target. Bloomberg Intelligence said it could result in a palm oil glut in the Southeast Asian nation.
Malaysian palm oil exports dropped 16% in April from March, according to cargo surveyor Intertek Testing Services, as shipments to China, India, and Europe weakened. The country is the second-biggest exporter of the commodity.