Palm falls as higher output estimate eases supply concerns

• The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange closed down 30 ringgit, or 1.28pc, at 2,309 ringgit ($531.05) per tonne.
• Palm oil found support in early trade on expectations of a supply disruption as Malaysia shut down some plantations due to the coronavirus, Bagani added.
• 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 June delivery on the Bursa Malaysia Derivatives Exchange closed down 30 ringgit, or 1.28pc, at 2,309 ringgit ($531.05) per tonne. The contract marked its third session of losses on Thursday.

In the previous session, palm dived 2.6pc on mounting worries over a plunge in global demand as more countries are under shutdown orders to curb the spread of the pandemic.

"The Southern Palm Oil Millers Association has estimated a 4pc increase in palm oil production. This may lead to a 5-8pc increase in Malaysia's palm oil production in March," said Anilkumar Bagani, research head of Sunvin Group.

Palm oil found support in early trade on expectations of a supply disruption as Malaysia shut down some plantations due to the coronavirus, Bagani added.

The market is also monitoring whether Indonesia, the world's largest palm oil producer, will impose a lockdown after declaring a public health emergency over the coronavirus epidemic on Tuesday.

China's ports and shipping firms are bracing for a deeper and more prolonged supply chain disruption in the world's second-largest palm buyer as the global spread of the virus chokes international demand.

Dalian's most-active soyoil contract gained 0.6pc, while its palm oil contract firmed 0.9pc. Soyoil prices on the Chicago Board of Trade were unchanged.

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

Crude oil futures jumped nearly 5pc in early trading on Thursday after US President Donald Trump said he expected Saudi Arabia and Russia to reach a deal in the next few days to end their oil price war.

Stronger crude oil futures make palm a more appealing option for biodiesel feedstock.