JAKARTA: Malaysian palm oil futures fell on Tuesday, after rallying more than 5% in the last session, taking their cue from rival oils where investors also locked in gains, while the country’s plan to ease border restrictions also added pressure.
The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange fell 3.14% to 6,543 ringgit ($1,565.69) per tonne by closing time. “Our market reacted towards Dalian profit taking and technical correction,” a Kuala Lumpur-based trader said. Dalian’s most-active soyoil contract fell 0.37%, while its palm oil contract rose 0.32%. Soyoil prices on the Chicago Board of Trade was barely changed.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market. The palm oil benchmark has gained over 36% so far this year on the back of sluggish production, export restrictions by rival Indonesia and global vegetable oil supply worry following Russia’s invasion of Ukraine. Some selling pressure also came from Malaysia’s plan to reopen its borders from April 1 and waive quarantine for vaccinated visitors, another trader said. Separately, Malaysia’s plantation industries minister told an industry conference that more foreign workers were expected to arrive in May and June, which could help increase output from the world’s second largest producer this year to 20 million tonnes. Meanwhile, palm oil production in the world’s top producers Indonesia and Malaysia is likely to rise about 3% each this year, but it would not be enough to meet global edible oil demand, leading analyst James Fry said on Monday. The Russia-Ukraine war has halted Ukrainian sunflower oil shipments to the EU that usually represent around 200,000 tonnes per month, vegetable oil industry group FEDIOL said on Friday, adding that the EU was facing a shortfall.
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