JAKARTA: Malaysian palm oil futures extended losses on Monday for a second day as top producer Indonesia was set to issue the first export permits since it allowed shipments to resume last week.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange fell 1.81% to 6,238 ringgit ($1,429.42) per tonne by close of trade.
Indonesia has received its first requests for palm oil export permits following the lifting of a ban a week ago, some of which could be granted on Monday, a senior official said, signaling a calibrated resumption of shipments amid protracted delays.
Last week, the country had allowed the resumption of crude palm oil exports and its derivatives, but put in place a policy of mandatory sales to the local market at a certain price level to secure supply of the vegetable oil at home.
Indonesia plans to initially allocate 1 million tonnes of palm oil exports after the government lifts the export ban. The country typically exports around 3 million tonnes of palm oil every month.
“This allocation comes with lots of restrictions, which the market sees as slow-moving, but will ease current shortage none the less,” a Kuala Lumpur-based trader said.
Meanwhile, expectations of soft palm oil output from Malaysia peninsula were cushioning the drop in the benchmark contract price, the trader added.
The Malaysian Palm Oil Association (MPOA) chief executive Nageeb Wahab told Reuters on Monday he maintained his 2022 production forecast at under 19 million tonnes, versus 18.1 million tonnes last year, despite influx of workers this year due to severe losses already incurred so far.
On the Dalian exchange, its most-active soyoil contract traded 0.60% lower, while its palm oil contract rose 1.09%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Palm oil benchmark contract may seek a support around 6,220 ringgit per tonne, as suggested by a retracement analysis, Reuters technical analyst Wang Tao said.