Palm oil closes higher as supply concerns linger
Malaysian palm oil futures rose for a second straight session on Wednesday, supported by concerns over lower production and stronger rival oils.
The benchmark palm oil contract FCPOc3 for April delivery on the Bursa Malaysia Derivatives Exchange was up 0.93% at 5,331 ringgit ($1,272.32) per tonne at the close of trade, regaining some of the 0.42% drop in the overnight trade.
“Palm is very resilient, still trading firm despite lower export but I think everyone is worried about future supply,” a trader in Kuala Lumpur said.
Malaysia’s Jan 1-25 palm oil exports fell between 32.9% and 36.7% compared with the same period in December, cargo surveyors said on Tuesday.
Labour crunch at Malaysian palm oil plantations due to coronavirus border closures has led to production constrain and prices are expected to remain firm for at least the first half of the year, a Reuters poll showed this week.
The supply concern is also reflected in China’s Dalian market, the trader added.
Dalian’s palm oil contract DCPcv1 gained 1.79% and its most-active soyoil contract DBYcv1 rose 0.43% on Wednesday. Prices of soyoil on the Chicago Board of Trade BOcv1, also up 0.32%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Meanwhile, top producer Indonesia ran an early testing for gasoline made from palm oil as the country aims to expand use of the vegetable oil in its domestic energy sector.
Source: Reuters (Reporting by Fransiska Nangoy and Bernadette Christina; Editing by Rashmi Aich and Shailesh Kuber)