Palm oil firms on clarity over Malaysia's political crisis, virus concerns cap gains
- Palm rose as much as 2.36% during the session, but concerns over a slump in edible oil demand due to the coronavirus outbreak capped gains.
KUALA LUMPUR: Malaysian palm oil futures inched up on Monday on clarity over the country's political situation, and tracking a rise in Asian stocks that gained on hopes of stimulus from central banks to mitigate the impact of the coronavirus outbreak.
The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange closed up 3 ringgit, or 0.13%, at 2,322 ringgit ($552.73).
Palm rose as much as 2.36% during the session, but concerns over a slump in edible oil demand due to the coronavirus outbreak capped gains.
Malaysia's February palm oil exports fell between 11.84% and 12.9% compared with January, cargo surveyors said on Saturday.
Prices are expected to stabilise this week but uncertainty around the impact of the coronavirus outbreak on palm oil demand in China and the Middle East could still pressure prices, said Oscar Tjakra, senior analyst at Rabobank's RaboResearch Food & Agribusiness.
Palm oil prices fell 11.5% last week, the sharpest drop since October 2008, pulled down by sell-offs in global equities, commodities and bonds amid fears of the coronavirus epidemic developing into a pandemic.
However, Asian shares steadied on Monday as investors placed their hopes on a coordinated global monetary policy response to weather the damaging economic impact of the virus.
Meanwhile, Ramadan demand is picking up as prices fell to around 2,300 ringgit, and there are expectations of an improvement in exports in March, said Marcello Cultrera, institutional sales manager at Phillip Futures in Kuala Lumpur.
Ramadan is the holy Islamic month when Muslims worldwide fast and pray. It is expected to start on April 23 this year.
"Clarity on Malaysian political situation was partly supportive of the market as the market takes a positive outlook on export demand prospect," Sathia Varqa, owner and co-founder of Singapore-based Palm Oil Analytics said.
Malaysia and India will work on improving ties that soured under former Malaysian Prime Minister Mahathir Mohamad and badly affected palm oil trade between the countries, officials from both nations said.
Separately, Dalian's most-active soyoil contract traded 0.32% lower, while its palm oil contract fell 0.71. Soyoil prices on the Chicago Board of Trade gained 0.63%.
Palm oil price is affected by price movements in related oils as they compete for a share in the global vegetable oils market.