Palm oil ticks up on soyoil strength, low inventory forecast

KUALA LUMPUR: Malaysian palm oil futures edged up on Monday, gaining for a third session in four on the back of strength in rival soyoil and expectations of low inventories and tight supply.

The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange ended up 3 ringgit, or 0.08%, at 3,740 ringgit ($903.38) a tonne.

The contract rose as much as 1.6% earlier to its highest since March 25.

Malaysia's end-March palm oil inventories likely inched 1.3% higher from February to 1.32 million tonnes, as production advanced for the first time in six months, a Reuters survey showed on Monday.

However, palm stockpiles are expected to remain squeezed as March exports likely surged 25% to 1.12 million tonnes and offset output.

Palm oil exports from the world's second-largest producer during April 1-5 also rose 10.6% from the same period in March to 184,070 tonnes, said cargo surveyor Intertek Testing Services.

"Tight supply is likely to keep prices elevated, but signs of recovering supply could limit upside," Ivy Ng, regional head of plantations research at CGS-CIMB Research, said in a note.

"We project crude palm oil prices to come in at 3,500-4,000 ringgit a tonne in April 2021 amid low inventory in Malaysia, which will take time to rebuild," she added.

Malaysia's palm oil inventories at the end of 2021 are projected to decline for a third consecutive year to 1.12 million tonnes, state agency the Malaysian Palm Oil Council (MPOC) said.

The Malaysian Palm Oil Board raised its forecast for palm oil export revenue in 2021 to 75 billion ringgit ($18.12 billion), from 73.25 billion ringgit last year.

Soyoil prices on the Chicago Board of Trade were up 0.9%. The Dalian exchange is 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.