KUALA LUMPUR: Malaysian palm oil futures reversed early losses to tick up on Wednesday, as hopes of a recovery in production was dashed after Indonesia stopped a batch of migrant workers from entering labour-starved Malaysian palm oil estates.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange gained 56 ringgit, or 0.89%, to 6,360 ringgit ($1,451.72) a tonne, up for a second consecutive session.
Traders are concerned over a slower recovery in Malaysia’s production after Indonesia on Tuesday cancelled a long-awaited plan to send its citizens to work in palm oil plantations in the world’s second largest producer, which has faced a labour shortage.
Capping gains, Indonesia is gearing up to re-enter the export market and as both the countries enter the seasonal high output in the coming months, Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics, said.
Prices will face downward pressure although demand is seen improving as China gradually opens up, Varqa added.
Top producer Indonesia set crude palm oil reference price at $1,700.12 per tonne for June, Musdhalifah Machmud, a senior official at coordinating ministry of economic affairs, said on Tuesday, up from May’s $1,657.39 a tonne.
India has slashed the base import prices of crude and refined palm oil, while raising the price of crude soyoil, the government said late on Tuesday.
The Malaysian Palm Oil Council lowered its 2022 production outlook for the country to 18.6 million tonnes and pegged prices to remain above 6,000 ringgit ($1,367.37) a tonne this year.
Dalian’s most-active soyoil contract fell 0.1%, while its palm oil contract rose 0.4%. Soyoil prices on the Chicago Board of Trade were down 0.7%.
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