KUALA LUMPUR: Malaysian palm oil futures fell on Tuesday, after touching a near three-week high in the previous session, as Indonesia maintained its domestic sales rule and traders fretted about slow export demand.
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange slid 49 ringgit, or 1.24%, to 3,887 ringgit ($915.02) a tonne by the midday break after a three-day climb.
“Since yesterday (Monday) afternoon, we noticed the contract readjusting lower on the Indonesian announcement to hold the 1:6 export ratio versus domestic consumption,” said Marcello Cultrera, director at commodities consultancy Apricus 8 Pte Ltd. This suggests that supply is seen improving with higher year-on-year ending-stocks, he said.
Indonesia’s trade minister said on Monday cooking oil producers must increase supply to the domestic market by 50% for the next three months to meet rising demand ahead of Islamic religious festivities, but it would not affect the export-to-domestic sales ratio. The nation’s palm oil fund (BPDPKS) estimated that 30.22 trillion rupiah ($2.02 billion) would be needed to subsidise palm oil-based biodiesel distribution in 2023.
Palm oil extends gains on bargain buying, ends higher
In Malaysia, cargo surveyors are scheduled to release their January export data later in the day. Exports from Malaysia during Jan. 1-25 slumped between 28% and 35% from a month earlier due to weaker demand from key markets Europe, China, and India, cargo surveyor data showed. Dalian’s most-active soyoil contract fell 0.3%, while its palm oil contract eased 1.3%.
Soyoil prices on the Chicago Board of Trade were up 0.4%. Palm oil may test a support at 3,888 ringgit per tonne, a break below which could open the way towards 3,796 ringgit, Reuters technical analyst Wang Tao said. Malaysia’s financial markets will be closed on Wednesday for a public holiday. Trading will resume on Thursday, Feb. 2.
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