Palm oil set for weekly drop on lower exports, virus scare

• The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange was up 14 ringgit.
• The contract touched its lowest since Feb. 3, with palm oil losing 6.2pc so far this week.
• Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange was up 14 ringgit, or 0.53pc, at 2,639 ringgit ($637.59) during the midday break.

Earlier in the session, the contract touched its lowest since Feb. 3, with palm oil losing 6.2pc so far this week.

"Shanghai and Hong Kong stocks are in the positive and are not coming down, soybean oil and Dalian came off the low tracking this and it spurred some buying in the BMD," a Kuala Lumpur-based trader said.

Market sentiment got a lift after health officials said the daily death toll in Hubei, the Chinese province at the centre of the coronavirus outbreak, halved and the number of new cases dropped from a record posted the day before.

China stocks advanced on Friday, on course for their first weekly gain in four, as the number of new coronavirus cases dropped.

Soyoil prices on the Chicago Board of Trade edged up 0.16pc.

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

However, the market remained bearish and any upside is a dead cat bounce - a brief recovery, the trader said.

A drop in exports to Malaysia's largest destination markets - India and China - have fuelled selling pressure this week, as data from cargo surveyors showed Feb. 1-10 exports falling 20pc-29.4pc.

The market expects a further decline in exports between Feb. 1 and Feb. 15, as China continues to grapple with the coronavirus outbreak and India buys less following a restriction on refined palm oil.

India's vegoil imports in January fell 6pc to 1.2 million tonnes from a year ago, the Solvent Extractors' Association of India said on Thursday, further stoking demand concerns.

Dalian's most-active soyoil contract traded 1.2pc lower, while its palm oil contract dropped 1.1pc.

Palm oil may revisit its Jan. 28 low of 2,575 ringgit per tonne, Reuters technical analyst Wang Tao said.