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Markets

Palm ends lower on higher Indonesian output forecast for 2021

  • The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange ended down 19 ringgit, or 0.47%, at 4,042 ringgit ($981.07) a tonne, after rising 5% on Monday.
  • Indonesia's crude palm oil output is estimated at 48.4 million tonnes while crude palm kernel oil (CPKO) is expected to be at 7.29 million tonnes this year, IOPRI said.
04 May 2021

KUALA LUMPUR: Malaysian palm oil futures ended lower on Tuesday after a volatile day of trade, trimming some of the previous session's gains, on forecast for higher Indonesian output this year and demand concerns due to a surge in COVID-19 cases globally.

The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange ended down 19 ringgit, or 0.47%, at 4,042 ringgit ($981.07) a tonne, after rising 5% on Monday.

"Albeit there's tightness in competing vegetable oils, the market today is a little nervous as buyers remain on the sidelines," said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.

Many traders have cited the possibility of top producer and rival Indonesia reducing its levy by $100, which would make Indonesian palm oil more competitive, he added.

Output in the world's biggest palm producer is expected to jump 7.1% to 55.69 million tonnes in 2021 due to more conducive weather conditions, a researcher at the Indonesia Oil Palm Research Institute (IOPRI) said.

Indonesia's crude palm oil output is estimated at 48.4 million tonnes while crude palm kernel oil (CPKO) is expected to be at 7.29 million tonnes this year, IOPRI said.

Coronavirus infections in India, the world's biggest palm oil importer, surged past 20 million on Tuesday, raising concerns it would hit demand as the country struggles with a devastating second wave of the virus.

Soyoil prices on the Chicago Board of Trade were up 1.3%. The Dalian exchange is closed until May 5 for holidays.

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