KUALA LUMPUR: Malaysian palm oil futures fell for a third straight day on Tuesday, as exports in the first half of November slumped, although a tight supply outlook limited losses.
The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange reversed early gains to close down 0.15% at 3,278 ringgit ($799.12) a tonne, its lowest closing since Nov. 10.
Malaysia’s exports during Nov. 1-15 fell between 11% and 14% from the same period in October, with a drop in shipments to the Indian subcontinent, according to data released by cargo surveyors on Monday.
The bigger concern is supply tightness, as the Southern Palm Oil Millers Association reported a 16% drop on-month in production during Nov. 1-15, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
“Supply concerns are keeping prices firmer and until production pattern shows signs of improvement, prices will remain stronger going into Q1 2021,” he added. The world’s largest producer of crude palm oil, FGV Holdings Bhd, warned that its fourth-quarter output would be hit by uncertainties over the weather and curbs to limit the spread of the coronavirus.
Outlook in Indonesia, however, is bearish due to rising production, higher stockpile and a halt in B40 biodiesel mandate following the widening of palm oil-gasoil spread, said Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics. Indonesia is unlikely to proceed with plans to raise the bio-content of its palm oil-based biodiesel to 40% next year as it struggles to fund the programme, an energy ministry official said on Monday.—Reuters
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