Palm oil closes up on lower inventories in Malaysia

Malaysian palm oil futures closed higher on Tuesday, as industry data showed that stockpiles of the tropical oil slumped to their lowest levels in six months.

The benchmark palm oil contract FCPOc3 for April delivery on the Bursa Malaysia Derivatives Exchange closed up 14 ringgit, or 0.36%, at 3,898 ringgit ($818.22).

Malaysia’s palm oil stocks fell more than expected to their lowest in six months at the end of January as production plunged to the lowest level in nine months amid steady exports.
Palm oil imports by India, the world’s biggest importer of vegetable oils, in January dropped more than 12% from a month ago to a three-month low as negative refining margins for crude palm oil prompted refiners to switch to rival soyoil.

Soyoil prices on the Chicago Board of Trade BOcv1 were up 1.2%.

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

Oil prices edged up on Tuesday as uncertainty over fighting in the Middle East kept markets on edge, but gains were capped by concerns that central banks will keep interest rates higher for longer to battle inflation, weighing on energy demand.

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

The rebound in palm oil prices is likely to be capped by abundant supplies of rival soyoil and sunflower oil, which are “soft” oils available at discounts to tropical palm oil for the first time in more than a year.

Palm oil FCPOc3 may fall into a range of 3,845 ringgit to 3,856 ringgit per metric ton, as it failed to break resistance at 3,925 ringgit.
Source: Reuters (Reporting by Mayank Bhardwaj; Editing by Shilpi Majumdar)