KUALA LUMPUR: Malaysian palm oil futures rose on Tuesday to their highest in nearly three weeks, buoyed by tight March inventories even as cargo surveyor data showed a drop in this month’s exports.
The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange climbed 107 ringgit, or 1.78%, to 6,112 ringgit ($1,444.41) a tonne by the midday break, extending gains to a third session and hitting its highest since March 24.
Palm oil inventories in the world’s second largest producer shrank to the lowest in a year at the end of March, as a larger-than-expected jump in exports erased strong output growth, data released by the Malaysian Palm Oil Board (MPOB) on Monday showed.
“We reckon that the high exports may not recur in April after the removal of Indonesia’s Domestic Market Obligation policy,” analysts at brokerage UOB Kay Hian said in a note.
Indonesia is expected to recapture market share for refined palm products after the top producer last month overturned a rule restricting exports, UOB Kay Hian added.
Malaysia’s exports for April 1-10 declined about 26% from a month earlier, data from cargo surveyors showed on Monday.
Nonetheless, a shortage of sunflower oil due to the Russia-Ukraine conflict and higher edible oil demand ahead of Eid al-Fitr celebrations next month will keep crude palm oil prices at 6,000-7,000 ringgit a tonne in April, Ivy Ng, regional head of plantations research at CGS-CIMB Research, said in a note.
Palm ends at two-week high as end-March inventories shrink
Further supporting prices, oil prices climbed as fears of a demand downturn in China eased after Shanghai relaxed some COVID-related restrictions, and OPEC warned it would be impossible to increase output enough to offset lost Russian supply.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
Dalian’s most-active soyoil contract rose 1.7%, while its palm oil contract gained 2.6%. Soyoil prices on the Chicago Board of Trade were up 1.4%.
Source: Brecorder
