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Palm oil drops after hitting 4-wk high on China reopening hopes

KUALA LUMPUR: Malaysian palm oil futures reversed early gains on Wednesday after hitting a near four-week high on hopes of a recovery in demand after China eased COVID-19 curbs.

The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange lost 10 ringgit, or 0.24%, to 4,090 ringgit ($925.34) a tonne.

In a major step towards freer travel, cheered by global stock markets on Tuesday, China will stop requiring inbound travellers to go into quarantine from Jan. 8, the National Health Commission (NHC) said late on Monday.

Malaysia, the world’s second largest palm oil producer, has maintained its January export tax for crude palm oil at 8% and raised its reference price, a circular on the Malaysian Palm Oil Board website showed.

Malaysian benchmark crude palm oil spot prices will average at $850 (3,770 ringgit) per tonne 2023, significantly lower than $1,175 in 2022, Fitch Ratings said in a report.

Malaysian palm oil futures surge on China optimism

“The outlook for palm oil demand growth has been boosted by Indonesia’s decision in December 2022 to increase the share of palm-oil based fuel in diesel. However, we expect supply to increase from 2Q23, and cause prices to drop in 2H,” Fitch said.

Dalian’s most-active soyoil contract rose 1.7%, while its palm oil contract also gained 1.3%. Soyoil prices on the Chicago Board of Trade were down 0.2%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

Palm oil drops after hitting 4-wk high on China reopening hopes

Source: Brecorder

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