Malaysian palm oil futures climbed 3.85% for the week on Friday, buoyed by a rally in global equities and supply concerns stemming from coronavirus-driven curbs on some plantation activity in the country.
The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange closed up 19 ringgit, or 0.81%, at 2,376 ringgit ($547.47) per tonne.
Palm rose for the second straight week, gaining strength from a rally in Asian stocks as investors wagered policymakers will roll out more stimulus measures to combat the coronavirus pandemic.
Supply concerns are also growing as Malaysia, the world’s second-largest palm producer, ordered a one-month virtual lockdown until mid-April and restricted some plantation activity.
“The market has priced in for the supply deficit as well as the demand destruction from key destinations,” said Anilkumar Bagani, research head of Sunvin Group, a Mumbai-based vegetable oil broker.
Malaysia’s palm oil exports for March 1-25 fell between 11.7% and 13.6% on weak demand amid the virus outbreak, data from cargo surveyors showed on Wednesday.
The world’s largest palm oil buyer India has initiated a 21-day lockdown to slow the spread of the virus, stoking demand worries and capping prices.
“The Indian government is taking all the measures to keep normalizing the port and transport operations for food items but still the supply side is affected and it may result in the demand reduction for vegetable oils,” Bagani said.
Indonesia, the world’s biggest palm producer, set its crude palm oil export tax at zero for April, down from $3 a tonne in March, a Trade Ministry document showed on Friday.
Dalian’s most-active soyaoil contract slipped 1.63%, while its palm oil contract was up 0.5%. Soyaoil prices on the Chicago Board of Trade gained 0.57%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
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