KUALA LUMPUR: Malaysian palm oil futures reversed losses on Thursday after trading in a tight range, but the contract ended virtually unchanged, weighed down by sluggish demand and as traders booked profits.
The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange gained 3 ringgit, or 0.07%, to 4,090 ringgit ($925.34) a tonne.
Although production is lower, traders are concerned about demand momentum, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
Palm oil had tracked a rally in Dalian edible oil prices this week on optimism about a recovery in demand in key market China, after it relaxed its COVID-19 border entry rules, but the excitement has since dissipated as cases surge there.
Indonesia, the world’s largest producer, will start its mandatory palm oil biodiesel 35% blending on Feb. 1, a month later than initially planned, the energy ministry said.
Malaysia keeps January crude palm oil export duty at 8%
Key export market India extended a policy to import refined palm oil at a lower duty and allowed imports of 51,000 tonnes of cotton at nil duty in 2023, the government said in a notification late on Thursday.
“The move by China to lessen their restrictions added with India’s move to allow free imports of edible oils is seen to greatly benefit Indonesia,” said Paramalingam.
Dalian’s most-active soyoil contract gained 0.2%, while its palm oil contract eased 0.2%. Soyoil prices on the Chicago Board of Trade were down 0.03%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.