Palm hits 10-week closing low on weak crude prices, Indonesian export plan

KUALA LUMPUR: Malaysian palm oil futures closed at a more than 10-week low on Monday and extended losses for a fourth consecutive session, dragged by weak crude and as Indonesia’s makes headway in its plans to speed up exports.

The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange fell 122 ringgit, or 2.06%, to 5,798 ringgit ($1,312.66) a tonne, its lowest closing since April 4.

Indonesia, the world’s biggest exporter of palm oil, has yet again reversed its export policy, looking to accelerate shipments just weeks after ending a three-week export ban aimed at maintaining domestic supply.

The country has issued export permits for 1.16 million tonnes of palm oil products under a programme to accelerate shipments, a trade ministry official said.

Meanwhile, Malaysia should see slower exports in June and higher inventories as trade flows shift back to Indonesia, although Jakarta might still control shipment volumes as it seeks to secure domestic cooking oil supplies, analysts said.

Palm falls for second day as Indonesia prepares to accelerate exports

Malaysia’s end-May inventories shrank as exports surged to a five-month peak, while production fell less than expected amid a prolonged labour shortage, data from the Malaysian Palm Oil Board (MPOB) showed on Friday.

Oil dropped about $2 a barrel as a flare-up in COVID-19 cases in Beijing dented hopes of a Chinese demand rebound, while worries about more interest rate hikes to control rampant inflation added further pressure.

Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.

In rival oils, Dalian’s most-active soyoil contract fell 1.5%, while its palm oil contract lost 2.6%.

Soyoil prices on the Chicago Board of Trade were down 1.4%.

Crude palm oil prices could trade in the range of 5,500-6,500 ringgit per tonne in June due to the uncertain export supply of sunflower oil from Ukraine and lower-than-usual palm oil export supply from Indonesia, Ivy Ng, regional head of plantations research at CGS-CIMB Research, said in a note.