KUALA LUMPUR: Malaysian palm oil futures climbed on Tuesday to their highest in nearly three weeks, buoyed by tight inventories even as analysts forecast a drop in April exports.
The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange rose 175 ringgit, or 2.91%, to 6,180 ringgit ($1,460.65) a tonne, extending gains for a third session and hitting its highest closing price since March 23.
Palm oil inventories in the world’s second-largest producer shrank to the lowest in a year at the end of March, as a larger-than-expected jump in exports erased strong output growth, data released by the Malaysian Palm Oil Board showed on Monday.
“We reckon that the high exports may not recur in April after the removal of Indonesia’s domestic market obligation policy,” analysts at brokerage UOB Kay Hian said in a note.
Indonesia is expected to recapture market share for refined palm products after the top producer last month overturned a rule restricting exports, the brokerage added.
Malaysia’s exports for April 1-10 declined about 26% from a month earlier, according to data from cargo surveyors on Monday.
Nonetheless, a shortage of sunflower oil due to the Russia-Ukraine conflict and higher edible oil demand ahead of Eid al-Fitr celebrations next month will keep crude palm oil prices at 6,000-7,000 ringgit a tonne in April, Ivy Ng, regional head of plantations research at CGS-CIMB Research, said in a note.
Indonesia’s 2022 crude palm oil production is estimated at 48.24 million tonnes, up from 46.85 million tonnes in 2021, according to the agriculture ministry.
Further lifting prices, crude oil prices jumped on easing concerns about demand in China after Shanghai relaxed some pandemic-related restrictions, and OPEC warned it would be impossible to increase output enough to offset lost Russian supply.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
Dalian’s most-active soyoil contract rose 1.8%, while its palm oil contract gained 2.8%. Soyoil prices on the Chicago Board of Trade were up 1.5%.
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