Palm dips on uncertainty over production, falling exports

• The benchmark palm oil contract, for April delivery, on the Bursa Malaysia Derivatives Exchange pared some losses to end down 12 ringgit.
• Palm oil gained 2.3pc in the previous session as bargain-buying fuelled its biggest daily jump since Jan. 2.
• Malaysia's Jan. 1-20 palm oil exports fell between 7.4pc and 9.9pc from the month before, according to cargo surveyors.

KUALA LUMPUR: Malaysian palm oil futures eased on Tuesday, dragged down by uncertainty over output and concerns about lower exports to major customers China and India.

The benchmark palm oil contract, for April delivery, on the Bursa Malaysia Derivatives Exchange pared some losses to end down 12 ringgit, or 0.4pc, at 2,890 ringgit ($709.90). The contract earlier fell to an intraday low of 2,819 ringgit.

Palm oil gained 2.3pc in the previous session as bargain-buying fuelled its biggest daily jump since Jan. 2.

"Lower Jan. 1-20 exports, coupled with a rising production outlook, weighed down the market this morning," said Sathia Varqa, owner and co-founder of Singapore-based Palm Oil Analytics.

He was referring to a forecast by the Southern Peninsular Palm Oil Millers' Association for an 8.33pc on-month rise in production during first three weeks of January.

However, the market recovered from the session's lows after data from six producers and refiners showed January production is likely to decline 10pc, raising concerns that inventories could fall 10-13pc, said Marcello Cultrera, institutional sales manager at Phillip Futures in Kuala Lumpur.

"Nonetheless, the short-term leading concern is the lack of palm demand," he said.

Malaysia's Jan. 1-20 palm oil exports fell between 7.4pc and 9.9pc from the month before, according to cargo surveyors.

Exports to China, the second-largest importer, have been low ahead of the Lunar New Year holidays, Cultrera said.

Concerns over lower exports to India, the world's biggest buyer of edible oils, also hit market sentiment.

India's palm imports could fall as much as 11pc in 2019/20 amid a diplomatic row with Malaysia, Indian industry officials said last week.

Earlier this month, India, the world's largest importer of palm oil, slapped curbs on imports of refined palm oil and informally asked traders to halt all palm imports from Malaysia after the country's prime minister criticised New Delhi's actions in Kashmir and its new citizenship law.

Elsewhere, Dalian's most-active soyoil contract fell 2.16pc, while its palm oil contract slid 2.6pc. Soyoil prices on the Chicago Board of Trade were 1pc lower.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.