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Markets

Palm oil snaps 5-day losing streak on fears of lower output

  • Palm ends five-day decline.
  • Contract logs lowest closing since Dec. 3.
  • Demand low, supply tight –broker.
Published January 18, 2021

KUALA LUMPUR: Malaysian palm oil futures snapped a five-session losing steak on Monday in volatile trading, buoyed by indications of lower production, but gains were limited by concerns over tepid demand after shipments during the first half of January slumped.

The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange closed up 23 ringgit, or 0.7%, to 3,345 ringgit ($825.93) a tonne. The contract had fallen 0.96% during the midday break.

Palm slipped nearly 11% last week as cargo surveyors reported a 42% monthly decline in exports during Jan. 1-15.

"The market came off further long position squaring, it looks like more of panic selling due to low demand," a Kuala Lumpur-based trader said.

Although demand is weak, the end-stocks were low and supply is still tight, the trader added.

Southern Peninsular Palm Oil Millers Association forecast output during Jan. 1-15 fell 29% on the month before, traders said.

Malaysia, the world's second-largest palm producer, have been hit by floods in several regions, leading to evacuation of thousands of people.

Dalian's most-active soyoil contract gained 0.2%, while its palm oil contract slipped 0.8%. The Chicago Board of Trade was closed for a public holiday.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

Malaysia is taking legal action at the global trade watchdog against the European Union and member states France and Lithuania for restricting palm oil-based biofuels, the government said on Friday.

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