SINGAPORE: Malaysian palm oil futures rebounded on Tuesday, amid supply concerns and inclement Indian weather prompting higher purchases of imported edible oils, while a weaker ringgit also lent support.
The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange rose 36 ringgit, or 0.91% to 3,974 ringgit ($841.24) a metric ton by midday break.
Stagnating production and dwindling stockpiles will underpin palm oil prices relative to other edible oils in the near term, Bloomberg reported on Tuesday.
Malaysia’s palm oil stocks are expected to drop below 2 million tons for the first time in six months at the end of February, with output likely to drop for a fourth consecutive month, a Reuters survey showed on Monday.
CME Group, a global exchange operator, on Tuesday said the domestic biodiesel mandate by the world’s biggest palm oil producer Indonesia could lead to a further strain in global supply, supporting palm prices in 2024.
Untimely rainfall and hailstorms have battered winter-sown crops, including rapeseed, in India. Lower-than-expected rapeseed production may force the world’s biggest edible oil importer to continue expensive overseas purchases of palm oil, sunflower oil and soybean oil.
China will spend 140.63 billion yuan on stockpiling grain, edible oils and other materials this year, up 8.1% from 2023, while also expanding oilseed crop production to enhance food security.
Malaysia’s plantation and commodities minister told an industry conference the country expected strong demand for palm oil from key markets such as India and China this year.
Dalian’s most-active soyoil contract increased 0.27%, while its palm oil contract slid 0.03% as of 0440 GMT.
Soyoil prices on the Chicago Board of Trade lost 0.18%. Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
The Malaysian ringgit, palm’s currency of trade, weakened 0.08% against the dollar. A weaker ringgit makes palm oil more attractive for foreign currency holders.
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