KUALA LUMPUR: Malaysian palm oil futures closed lower on Tuesday as slowing exports in July and higher end-June inventories negated the boost from top producer Indonesia’s plan to raise its biodiesel mandate.
Resuming trade after a long weekend, the benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange fell 24 ringgit, or 0.58%, to 4,133 ringgit ($931.91) a tonne. It had risen nearly 3% earlier in the session.
Malaysia’s end-June palm oil stocks rose 8.8% from the previous month to 1.66 million tonnes, according to Malaysian Palm Oil Board (MPOB) data.
Crude palm oil production climbed 5.8% from May, missing market expectations, while exports plunged 13.3% to 1.19 million tonnes amid rival Indonesia’s efforts to boost domestic and international demand for the edible oil.
Indonesia plans to raise the content of palm oil-based fuel in its biodiesel, known as B35, to 35% from 30% starting July 20, senior energy ministry official Dadan Kusdiana said last week.
Palm oil may retest support at 3,782 ringgit
Malaysia’s exports during July 1-10 fell between 15% and 21% from the same week in June, cargo surveyors said.
Talks of a recession and the drop in crude oil prices also limited the temporary upside in palm oil markets, as destination markets have not come up with big buying programmes, said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
In related oils, Dalian’s most-active soyoil contract rose 0.3%, while its palm oil contract fell 2.5%. Soyoil prices on the Chicago Board of Trade were down 1.8%.
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