KUALA LUMPUR: Malaysian palm oil futures rebounded on Thursday on bargain-buying after plunging to a one-year closing low, with production woes supporting sentiment as Indonesia stopped sending its workers to labour-starved estates in Malaysia.
The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange was up 132 ringgit, or 3.51%, at 3,893 ringgit ($876.80) a tonne by the midday break.
Palm fell 8.6% in the previous session on weak July exports.
Indonesia said on Wednesday it has temporarily stopped sending its citizens to work in Malaysia, including thousands recruited for the plantation sector, citing a breach in a worker recruitment deal signed between the two countries.
“The delay could lead to palm oil production for second half of 2022 falling below the level from a year ago,” Ivy Ng, regional head of plantations research at CGS-CIMB Research, said in a note.
The labour concerns supported the market along with hopes of a resumption of destination buying due to its competitive edge over soy oil and to gas oil, said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
Palm tumbles 8pc to 1-year low on weak exports
However, the market will be watchful over a possible levy cut in top producer Indonesian, which if realized would put pressure on Malaysian palm oil to adjust itself to remain competitive, Bagani added.
Dalian’s most-active soyoil contract rose 1.1%, while its palm oil contract fell 0.08%. Soyoil prices on the Chicago Board of Trade were up 1.1%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Palm oil may test a support at 3,592 ringgit per tonne, a break below could open the way towards 3,284 ringgit, Reuters technical analyst Wang Tao said.
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