Malaysian palm oil futures on Tuesday ended at a more than nine-month low in a volatile trade, as forecasts for higher April inventory amid the coronavirus outbreak outweighed optimism from higher crude and soyabean oil prices.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange closed down 6 ringgit, or 0.3%, to 1,977 ringgit ($459.45) per tonne, its lowest closing price since July 19, 2019.
Malaysia's palm oil inventories for April likely rose 10% from March to their highest since December 2019, according to a Reuters poll. The poll also predicted that production rose 15% from the month before, while exports increased 4%.
Sime Darby Plantation, the world's largest palm oil planter by land size, warned that a prolonged coronavirus pandemic would further disrupt the palm oil supply chain.
European Union palm oil imports in the 2019/20 season that started last July fell 15% to 4.66 million tonnes by May 3, versus the year-earlier period.
Gains in crude oil and soyabean oil prices had helped ease the downward pressure on palm oil during early trade, a Kuala Lumpur-based trader said.
Oil prices jumped on Tuesday on hopes for a recovery in vehicle traffic and fuel demand as some European and Asian countries along with several US states began to ease coronavirus lockdown measures.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
Top palm producer Indonesia will likely face a "drier than usual" dry season in key agricultural regions this year, President Jokowi Widodo said on Tuesday, adding that measures must be put in place to ensure food security and price stability. Soyaoil prices on the Chicago Board of Trade (CBOT) were up 0.57%. The Dalian was closed for trading.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
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