Palm gains on bearish forecast, slightly weaker ringgit

JAKARTA: Malaysian palm oil futures extended gains on Wednesday, snapping losses from the previous session, after a selloff following a key data announcement and bearish forecast, with a marginally weaker ringgit.

The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange rose 27 ringgit, or 0.66%, at 4,122 ringgit ($1,050.46) a metric ton by the midday break.

“Today’s market is adjusting to yesterday’s oversold situation due to bearish forecast by The Malaysian Palm Oil Council (MPOC), despite the first time decrease in end stock figures for a while.

It will be range trading between 4,050 and 4,150 ringgit for the time being,“ a Kuala Lumpur-based trader said.

Dalian’s most-active soyoil contract was down 0.02%, while its palm oil contract fell 0.54%. Soyoil prices on the Chicago Board of Trade lost 0.17%.

Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market.

Data showed that Malaysia’s palm oil stocks in January fell 7.72%, the first time in 11 months, driven by a surge in exports despite production sliding to a 10-month low.

According to independent inspection company AmSpec Agri, exports of Malaysian palm oil products between February 1 and 10 fell 14.3% undefined compared to the January 1 and 10 period, while cargo surveyor Intertek Testing Services reported a 10.5% decline.

The artificial intelligence bubble will burst in the short run, hitting all commodity prices, including crude palm oil, veteran palm oil analyst James Fry said on Wednesday.

Palm oil purchases from top buyers India and China are expected to pick up from January to April this year, with stocks set to decline over the period, analyst Thomas Mielke told an industry conference on Wednesday.

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, an industry official said on Tuesday, putting pressure on output from the world’s second-largest producer.

The ringgit, palm’s currency of trade, slightly weakened 0.08% against the dollar, making the commodity cheaper for buyers holding foreign currencies.

Palm oil FCPOc3 may stabilise in the support zone of 4,063-4,083 ringgit per metric ton and bounce, according to Reuters’ technical analyst Wang Tao.