SINGAPORE: Malaysian palm oil futures slid more than 1% on Tuesday, falling for the first time in three sessions, on concerns over tepid demand in key consumer China amid COVID-19 restrictions.
The benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange closed down 65 ringgit, or 1.5%, at 4,368 ringgit ($922.69) a tonne.
“There were hopes that China would move from zero-COVID policy,” said one analyst. “But authorities have ruled out a shift from that policy.” The global outlook for palm oil remains uncertain, with strict pandemic policies in major importer China weighing on demand, while high energy prices and a slowdown in output provide support, leading industry analysts said at a conference on Friday.
China will persevere with its “dynamic-clearing” approach to COVID-19 cases as soon as they emerge, health officials said on Saturday, adding that measures must be implemented more precisely and meet the needs of vulnerable people.
China reported 7,691 new COVID-19 infections on Nov. 7, of which 890 were symptomatic and 6,801 were asymptomatic, the National Health Commission said on Tuesday.
Malaysia’s benchmark palm oil contract is expected to trade between 3,500 ringgit and 4,500 ringgit per tonne until the end of next March, leading industry analyst Dorab Mistry said.
Palm oil may test a support at 4,311 ringgit a tonne, a break below could open the way towards 4,220 ringgit-4,264 ringgit range, according to Wang Tao, a Reuters analyst for commodities technicals.
In related edible oils, Dalian’s most-active soyoil contract lost 1.1%, while its palm oil contract added 0.3%.
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