Palm oil clocks 3pc weekly gain, but higher March stocks weigh

• Malaysia extended its movement restrictions requiring most businesses to shut until April 28, as it tries to contain the spread of the coronavirus.
• Malaysia's exports in April 1-10 fell between 6.6pc and 12pc from the month before, cargo surveyors said on Friday.
• Palm oil inventories at end-March month rose 1.67pc from a month earlier, while production climbed 8.4pc, according to data by the Malaysian Palm Oil Board on Friday.

KUALA LUMPUR: Malaysian palm oil futures recouped early losses to log a 3pc weekly rise on Friday tracking gains in soybean oil, but higher March stocks amid falling exports capped gains.

The benchmark crude palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange closed up 9 ringgit, or 0.39pc, to 2,313 ringgit per tonne, after Thursday's more than 2pc drop.

Malaysia extended its movement restrictions requiring most businesses to shut until April 28, as it tries to contain the spread of the coronavirus.

The market was gripped by concerns over supply disruption this week, but it calmed on Friday after the country's biggest palm oil producing state, Sabah, agreed to reopen plantations and mills that do not have any coronavirus infections.

"Supply looks stable for time being given Sabah is back online and Peninsular Malaysia production trend seems strong, but the question is how sustainable is the demand and its drag on inventories," said Marcello Cultrera, institutional sales manager and broker at Phillip Futures in Kuala Lumpur.

Rising production, much lower domestic consumption and concerns over the biodiesel mandate in Indonesia and Malaysia are causing a price imbalance, Cultrera said.

Malaysia's exports in April 1-10 fell between 6.6pc and 12pc from the month before, cargo surveyors said on Friday.

Palm oil inventories at end-March month rose 1.67pc from a month earlier, while production climbed 8.4pc, according to data by the Malaysian Palm Oil Board on Friday.

Palm oil producers must brace for crude palm oil prices to fall sharply as lockdowns around the world curb consumption and boost stocks, James Fry, chairman of consultancy LMC International, told Reuters.

"Palm is too expensive compared to soft oils at the moment and should be trading around 2,100 ringgit or lower to capture more demand," Cultrera said.

Meanwhile, OPEC, Russia and other allies outlined plans on Thursday to cut their oil output by more than a fifth and said they expected the United States and other producers to join in their effort to prop up prices hammered by the coronavirus crisis.

Dalian's most-active soyoil contract gained 0.46pc, while its palm oil contract fell 3.46pc. Soyoil prices on the Chicago Board of Trade were up 0.85pc.

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