Palm slumps 3pc to one-week low as March stocks exceed estimates

KUALA LUMPUR: Malaysian palm oil futures plunged 3% to hit a one-week low on Monday, weighed down by higher-than-expected March inventories and tracking losses in rival soybean oil.

The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange closed down 125 ringgit, or 3.32%, to 3,642 ringgit ($901.09) a tonne, its lowest since March 31.

Palm extended losses into a third straight day, posting its biggest daily decline in nine sessions.

Malaysia's palm oil exports during April 1-10 gained between 10% and 11% from a month earlier, cargo surveyors said on Saturday.

However, improving exports could not excite the market as soyoil futures on the Chicago Board of Trade declined and are expected to drop further, said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.

In India, the biggest importer of Malaysian palm oil, buying activity has slowed as a surge in COVID-19 cases increased risks of a full lockdown in one state, which could hit vegetable oil demand during the Islamic holy month of Ramadan, Bagani added.

The market was further weighed down by Malaysian Palm Oil Board (MPOB) data showing end-March palm oil stocks rose 10.7% from the previous month to 1.45 million tonnes.

Inventories jumped more than expected to a four-month high, boosted by higher imports and production, but a surge in exports kept domestic supplies in check, according to MPOB data released during the midday break.

On Saturday, the US Department of Agriculture forecast Malaysian crude palm oil production in 2021/22 at 20 million tonnes, slightly up from an estimated 19.5 million tonnes in 2020/21 based on the assumption that the government will reopen borders and industry will be able to recruit new labourers.

Dalian's most-active soyoil contract fell 1.9%, while its palm oil contract dropped 3.1%. Soyoil prices on the Chicago Board of Trade were down 1.6%.

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