KUALA LUMPUR: Malaysian palm oil futures fell on Thursday to log their sharpest weekly plunge in more than three months, weighed down by uncertainties over the impact of the Omicron coronavirus variant in a holiday-shortened week.
The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange ended down 32 ringgit, or 0.68%, at 4,652 ringgit ($1,100.28) a tonne, its lowest closing since Oct. 4.
Palm fell for a second consecutive week to log a loss of 4.1%, its largest fall since Aug. 20.
Omicron is fuelling uncertainty and fear in the edible oil and external markets, with traders squaring off positions ahead of the long weekend and key data due next week, said Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics.
“Palm is in correction now, trying to reclaim its discount to soft oils to stay competitive,” he added.
LMC International chairman James Fry said in a conference that global supply of palm oil will see only “minimal growth” during 2019-2022 due to production issues caused by unfavourable weather and labour disruption in Malaysia.
Malaysia’s production is only expected to recover after the Muslim fasting month of Ramadan, or by May next year, after the world’s second largest producer allows the entry of new migrant workers, Dorab Mistry, director of Indian consumer goods company Godrej International said.
Thomas Mielke, head of research firm Oil World, said palm prices for the next six months will be supported by low stocks, and they will decline from next June onwards.
Dalian’s most-active soyoil contract fell 1%, while its palm oil contract eased 0.4%. Soyoil prices on the Chicago Board of Trade were up 0.6%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Malaysia’s financial markets will be closed on Friday for a public holiday announced in the country’s federal territories, with trading to resume on Monday, Dec. 6.
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