KUALA LUMPUR: Malaysian palm oil futures on Wednesday slipped from a near five-week high hit in the previous session, though expectations of tightening supplies limited losses.
The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange lost 50 ringgit, or 1.18%, to 4,203 ringgit ($954.36) a tonne by the midday break.
The contract is tracking an overnight plunge in the US market, but likely lower supplies and fewer exports from Indonesia have reined in losses, a Kuala Lumpur based trader said.
Exports from top producer Indonesia are expected to soften this year after a latest ruling to protect domestic supplies reduced the amount of overseas shipments allowed.
Palm oil production will likely see seasonally weaker output for the first quarter due to shorter working days amid festive seasons and La Nina-induced wet weather conditions, Refinitiv Commodities Research said in a note.
“Looking ahead, palm oil prices in Q1 might point to more upside due to Indonesia’s rising biodiesel mandate and potentially tighter supplies,” Refintiv said.
India’s palm oil imports in December jumped 94% from a year earlier to a record high for the month as higher discount to rival vegetable oils led refiners to increase purchases during the seasonally weak winter period, five dealers said.
Palm oil posts annual loss after three years of gains
Dalian’s most-active soyoil contract fell 0.3%, while its palm oil contract slipped 0.1%.
Soyoil prices on the Chicago Board of Trade eased after 1.4% overnight loss. Palm oil may fall to 4,109 ringgit per tonne, as it faces a strong resistance at 4,289 ringgit, Reuters technical analyst Wang Tao said.
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