29 February 2020, Saturday | 08:12pm

Palm set for worst week in 7 years, India’s curbs weigh

2020-01-17

 

KUALA LUMPUR: Malaysian palm futures traded flat on Friday, putting them on track for their worst weekly decline since 2012 as India’s import restrictions on the refined product weighed.

The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange was little changed at 2,886 ringgit ($710.66) during the midday break, its lowest in a month. This week’s fall of 7.9% is the biggest since September 2012.

“Prices plunged after India imposed restrictions on refined palm oils,“ said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari Sdn Bhd.

India, the world’s largest buyer of edible oils, last week restricted imports of refined palm oil and informally instructed traders to avoid purchases from Malaysia following a row over criticisms by Malaysia’s prime minister over India’s new citizenship law and actions in Kashmir.

The move is expected to create a huge challenge for Malaysia, as India has been its top market for the past five years.

The market is also wrestling with a drop in production, with refineries running at half their capacity as mills are not supplying enough crude palm oil for processing, Paramalingan said.

“Despite the sell-off, the market is also cognizant about end-stocks,“ he added.

Higher demand for biodiesel from top suppliers Malaysia and Indonesia and tightness in supply are supporting prices. Lower production is expected for the first half of the year as dry weather and lower fertiliser usage in early 2019 curbed yields.

Benchmark palm oil prices will not rise above 3,300 ringgit per tonne in the first half of 2020 and their recent rally has eliminated competitive edge over rival edible oils, industry analyst James Fry said.

Dalian’s most-active soyoil contract fell 0.3%, while its palm oil contract also slid 0.1%. Soyoil prices on the Chicago Board of Trade also dropped 0.1%.

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

Palm oil may fall to 2,818 ringgit per tonne, as it has broken a support at 2,911 ringgit, Reuters technical analyst Wang Tao said. -Reuters

 

 

Source: The Sun Daily

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