KUALA LUMPUR: Malaysian palm oil futures extended losses for a second day on Thursday as demand remained sluggish, while traders booked profits following a rally earlier this week.
The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange slid 37 ringgit, or 0.91%, to 4,050 ringgit ($916.70) a tonne by the midday break.
Although production is lower, traders are concerned about demand momentum, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
Palm oil had tracked a rally in Dalian edible oil prices earlier this week on optimism over a recovery in demand in key market China after it relaxed border entry rules, but the excitement has since dissipated as COVID-19 cases surge in the country.
Malaysia keeps January crude palm oil export duty at 8%
Indonesia, the world’s largest producer, will start its mandatory palm oil biodiesel 35% blending on Feb. 1, a month later than initially planned, the energy ministry said.
Key export market India extended a policy to import refined palm oil at a lower duty and allowed imports of 51,000 tonnes of cotton at nil duty in 2023, the government said in a notification late on Thursday.
“The move by China to lessen their restrictions added with India’s move to allow free imports of edible oils is seen to greatly benefit Indonesia,” said Paramalingam. Dalian’s most-active soyoil contract gained 0.1%, while its palm oil contract eased 0.7%.
Soyoil prices on the Chicago Board of Trade were down 0.1%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.