JAKARTA: Malaysian palm oil closed lower after the release of key data from Malaysian Palm Oil Board’s (MPOB) on Tuesday, while weakness in rival edible oils in the Dalian and Chicago markets also weighed on sentiment.
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange fell 63 ringgit, or 1.51 percent, to 4,097 ringgit (USD1,044.89) a metric ton at the close.
Data showed that Malaysia’s palm oil stocks in January fell 7.72 percent, the first time in 11 months, driven by a surge in exports despite production sliding to a 10-month low.
Exports of Malaysian palm oil products between February 1-10 fell 14.3 percent to 399,995 tons from 466,457 tonnes shipped in the January 1-10 period, independent inspection company AmSpec Agri Malaysia said on Tuesday.
Dalian’s most-active soyoil contract was down 0.3 percent, while its palm oil contract lost 0.69 percent. Soyoil prices on the Chicago Board of Trade fell 0.64 percent.
Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market.
Malaysia’s ageing oil palm plantations are expected to rise to 2 million hectares (4.94 million acres) by 2027 from the current level of around 1.7 million hectares, putting pressure on output from the world’s second-largest producer.
Meanwhile, Indonesia’s Estate Crop Fund (BPDP) has so far distributed 10.89 trillion rupiah (USD648.60 million) from a fund aimed at encouraging palm oil smallholders to replant and boost yields, an official said on Tuesday. Indian demand for palm oil is set to rebound this year as prices have come down, analysts said on Monday, although competition from Chinese soyoil, an alternative oil, will cap growth.
China’s demand for palm oil is expected to further decline this year as the country shifts to cheaper canola and soybean alternatives, palm oil traders and analysts said on Monday.
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