BEIJING: Malaysian palm oil futures extended early gains on Wednesday to its highest in over two months, underpinned by expectations of a decline in output at the world’s second-largest producer.
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange closed up 44 ringgit, or 1.11%, to 3,992 ringgit ($844.15) a metric ton, its highest closing since November 16, 2023.
The market had in early trade showed signs of tapering off, especially at prices that are crucial for producers planning their forward-month hedges, Marcello Cultrera, director at Singapore-based commodities consultancy Apricus 8 Pte Ltd.
“There is a clear downturn in demand from major markets like China and India, driven by steep negative import margins and diminished local consumption,” Cultrera added.
Malaysia’s production is forecast to drop this month, although the decline in output during Jan. 1-20 has been slower than initial projections of a 15%-18% plunge, he said.
Kuala Lumpur has maintained its February export tax for crude palm oil at 8% and lowered its reference price, a circular on the Malaysian Palm Oil Board website showed on Tuesday.
Oil seesawed between modest falls and gains as traders weighed the impact on prices stemming from escalating geopolitical tensions, concerns over tepid demand and a stronger dollar.
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock. In related oils, Dalian’s most-active soyoil contract rose 1.03% while its palm oil contract gained 0.37%. Soyoil prices on the Chicago Board of Trade were up 0.04%.
India’s sunflower oil imports are set to decline in coming months as prices have rallied due to a surge in freight rates, prompting buyers to shift to rival vegetable oils available at a discount, traders told Reuters.
Comments
Comments are closed for this article.