JAKARTA: Malaysian palm oil scaled a record high on Wednesday, hitting the 10% upper trading limit as top producer Indonesia decided to restrict its exports further.
The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange gained 10% to close at 7,060 ringgit ($1,686.98) per tonne.
The contract triggered a 10-minute cool-off period during which trading is allowed only within a specified range to keep volatility in check. This limit was expanded to 15% after the cool-off period.
Palm rose as much as 13.2% to 7,268 ringgit after the trading limit was expanded, with top analysts expecting prices to remain near record highs for the coming months.
Indonesia will increase its mandatory domestic sales of palm oil to 30% of companies’ planned exports from 20%, starting Thursday, under a scheme called the Domestic Market Obligation (DMO), Trade Minister Muhammad Lutfi said.
“The new DMO policy is once again to trigger bullish momentum in BMD CPO futures as the Indonesian palm oil export volume would be further lower,” said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
Palm buyers have already been jittery as the war in Ukraine has sent global commodity price soaring and removed a chunk of sunflower supply from the global market.
Tight edible oil stockpiles and blocked shipments from the Black Sea area are expected to keep prices near record highs for the coming months, but sticker shock is expected to curb global consumption in the latter half of 2022, leading industry analysts said.
Following the price movements in Malaysia, Dalian’s palm oil contract gained 8%, while its most-active soyoil contract rose 3.71%. Soyoil prices on the Chicago Board of Trade were up 1.68%.
Palm and related oils affect each other as they compete for a share in the global vegetable oils market.
Comments
Comments are closed.