Palm reverses early losses on estimates of lower production
Malaysian palm oil futures ended higher on Tuesday to snap two sessions of losses after an industry group estimated a decline in September production.
The benchmark palm oil contract FCPOc3 for December delivery on the Bursa Malaysia Derivatives Exchange closed up 21 ringgit, or 0.5%, at 4,194 ringgit ($1,002.63) a tonne.
Palm had earlier fell to an intraday low of 1.15% due to a sell-off across markets.
“After the tumultuous session yesterday, the market was juxtaposed between strong fundamentals and the contagion fear of short-selling by the commodity funds,” said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
Global stock markets grappled with contagion fears sparked by troubles at China Evergrande as growing risks the property giant could default on its massive debt pile prompted investors to flee riskier assets.
“The weaker ringgit, strong exports and tapering production kept prices supported albeit intermittent selling,” Paramalingam said.
Southern Peninsula Palm Oil Millers’ Association estimated Malaysia’s output during Sept. 1-20 declined 4.5% from the same week in August, traders said.
Exports of Malaysian palm oil products for Sept. 1-20 rose between 38% and 43% from the same period in the prior month, data from cargo surveyors showed on Monday. However, shipments slowed compared with the Sept. 1-15 period.
The bearish momentum in the market is driven by erosions in the external edible oils market and easing labour concerns in the region, but global supplies are expected to be tight due to prolonged drought in Canada, Refinitiv Agriculture Research said in a note on Monday.
Soyoil prices on the Chicago Board of Trade BOcv1 were up 0.6%, after dropping 2.5% in the previous session. The Dalian exchange is closed for a public holiday.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Source: Reuters (Reporting by Mei Mei Chu; Editing by Subhranshu Sahu, Sherry Jacob-Phillips and Aditya Soni)