Markets

Palm oil ends at near two-week high on demand rebound hopes

  • Investors await industry data amid supply uncertainties
  • MPOB cuts 2021 palm oil output forecast to 18mn tonnes
  • IOPRI pegs stronger Indonesia output in 2021, 2022
Published September 7, 2021

KUALA LUMPUR: Malaysian palm oil futures ended at a nearly two-week high on Tuesday, buoyed by expectations of demand pickup, though concerns around tightening supplies ahead of key industry data weighed on sentiment.

The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange closed up 61 ringgit, or 1.41%, to 4,392 ringgit ($1,057.29) a tonne, its highest closing since Aug. 26. It rose for a fourth straight session.

Investors await industry data to ascertain supply figures, analysts and traders said.

Refinitiv Commodities Research said in a note on Monday the market is supported by tight supplies as industry data showed Sept. 1-5 output fell 25% from the same period in August.

A Reuters poll last week, however, showed Malaysia's end-August palm oil inventories jumped 16% from the month before, while production rose 11%.

Palm oil shipments from Malaysia are seen higher in the first five days of September, and a more attractive tax structure compared with rival Indonesia is also expected to spur demand further, Refinitiv said.

Palm oil falls tracking rival oils, logs 1.5% weekly climb

Malaysia's palm oil board cut its outlook for the nation's 2021 crude palm oil production to 18 million tonnes, compared with its earlier forecast of 19.7 million tonnes, due to a pandemic-induced labour shortage that has hammered yields of the versatile palm fruit.

Top producer Indonesia's output is forecast to rise to 49.42 million tonnes in 2022, compared with an estimated 48.4 million tonnes this year, due to rains during this year's dry season, the Indonesia Oil Palm Research Institute's (IOPRI) said.

Dalian's most-active soyoil contract rose 0.6%, while its palm oil contract gained 0.9%. Soyoil prices on the Chicago Board of Trade were up 0.3%.

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

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