Palm oil ends higher after three-day slump, but weak exports cap gains
01/06/2023 (Business Recorder) - Malaysian palm oil futures rose on Thursday after logging a third consecutive monthly decline in the previous session, but weak exports and production growth weighed on sentiment.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange gained 83 ringgit, or 2.59%, to 3,284 ringgit ($740.47) a tonne, ending a three-session decline.
In May, the contract fell 4.1%, its third consecutive monthly loss.
The overall price trend for palm oil remains downwards, mainly due to anticipation of a rise in production, said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
“Demand is also slow as the key destinations are still having reasonably high edible oil stocks, thanks to cheaper sun oil, rapeseed oil and even competitive soybean oil,” Bagani said.
Malaysia’s exports during May fell 0.8% from April, cargo surveyor Intertek Testing Services said on Wednesday. Another cargo surveyor, AmSpec Agri Malaysia, said exports fell 1.8%.
Top producer Indonesia has set its crude palm oil reference price lower at $811.68 per tonne for the period June 1-15, making its export tax cheaper at $33 per tonne and levy at $85.
Neither Indonesia nor Malaysia have halted talks on their respective free trade agreements with the European Union over a dispute about a deforestation law and its impact on small palm oil producers, Malaysia’s commodities minister Fadillah Yusof said.
Dalian’s most-active soyoil contract gained 1.1%, while its palm oil contract fell 0.2%. Soyoil prices on the Chicago Board of Trade were up 1.5%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.