Palm rebounds on low Indonesia stockpiles
17/04/2023 (Business Recorder), Jakarta - Malaysian palm oil futures recovered on Monday, on the back of a sharp drop in Indonesia’s February inventories, and a weaker Malaysian ringgit.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange rose 1.96% to 3,636 ringgit ($822.81) per tonne. It lost 2.40% last week, the first weekly drop in three weeks.
Indonesia, the world’s top palm oil producer, had stocks of 2.64 million tonnes at the end of February, down 14.84% from a month earlier.
“Given the sharp decrease in Malaysian palm oil March-end stocks at 1.65 million tonnes, the combined stocks are expected to fall further,” Anilkumar Bagani, commodity research head at Sunvin Group, told Reuters.
Malaysia’s March palm oil end-stocks fell 21.08% from the previous month to 1.67 million tonnes, data from the Malaysian Palm Oil Board showed last Monday.
The Malaysian ringgit, palm’s currency of trade, weakened 0.43% against the dollar. A weaker ringgit makes palm oil more attractive for foreign currency holders.
Malaysia calculated a reference price of 4,063.58 ringgit per tonne for May and maintained export tax for crude palm oil at 8% for next month, a circular on the Malaysian Palm Oil Board website showed on Monday.
Dalian’s most-active soyoil contract dropped 1.37%, while its palm oil contract eased 0.44%. Soyoil prices on the Chicago Board of Trade were up 0.76%.
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 test a resistance zone of 3,729-3,740 ringgit per tonne, a break above which could lead to a gain to 3,797 ringgit, said Reuters technical analyst Wang Tao.