Palm oil rallies after Malaysia shuts more plantations

• The Dalian's most-active soyoil contract gained 0.7pc while its palm oil contract jumped 3.4pc. Soyoil prices on the Chicago Board of Trade were up 1.2pc.
• Palm oil is affected by price movements in related oils that compete in the global vegetable oils market.

KUALA LUMPUR: Malaysian palm oil jumped more than 2pc on Monday, tracking a rally in Dalian edible oil prices as supply concerns deepened after the world's second-largest producer shut down more palm operations in an effort to contain the coronavirus.

The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange closed with a gain of 59 ringgit, or 2.5pc, at 2,437 ringgit ($563.47) a tonne, its highest since March 6.

Palm surged as much as 3.7pc during the session after Malaysia's largest palm oil state, Sabah, extended a shutdown of plantations and factories until April 14 and widened the order to six districts.

"Market moved higher on stronger Dalian prices as China reduced repo rates and on fears that supply for soybean products and palm could falter," said one Kuala Lumpur trader.

China's central bank unexpectedly cut the rate on reverse repurchase agreements by 20 basis points on Monday, the largest cut in nearly five years, to relieve pressure on an economy ravaged by the coronavirus pandemic.

The Dalian's most-active soyoil contract gained 0.7pc while its palm oil contract jumped 3.4pc. Soyoil prices on the Chicago Board of Trade were up 1.2pc.

Palm oil is affected by price movements in related oils that compete in the global vegetable oils market.

India, the world's largest palm oil buyer, is in a three-week nationwide lockdown to stem the spread of coronavirus, which has delayed discharge of edible oil imports at the ports.

Indian refiners declared force majeure on crude purchases from the Middle East and there are concerns palm oil contracts could meet the same fate, said Oscar Tjakra, senior analyst at Rabobank's RaboResearch Food & Agribusiness.