Business Recorder (12/02/2020) - Malaysian palm oil futures fell more than 2% on Tuesday, weighed down by weak demand from top buyers India and China and expectations of higher production in February.
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange closed lower for the third straight session, down 2.14% to a settlement price of 2,695 ringgit per tonne.
“Demand worries are certainly re-emerging in the market," said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari Sdn Bhd.
Data from industry regulator the Malaysian Palm Oil Board (MPOB) on Monday showed January exports fell 13.2% from December, slower than expected.
Exports in the first 10 days of February declined between 20% and 29.4%, cargo surveyors Intertek Testing Services, Societe Generale de Surveillance and Amspec Agri Malaysia said.
Shipments to India and China will remain subdued in February due to New Delhi's restriction on refined palm oil, the coronavirus outbreak in China and the winter season, Kenanga Investment Bank said in a research note to clients. Palm oil buyers typically switch to soyabean oil during the winter months.
The coronavirus epidemic in China poses a “very grave threat for the rest of the world", the head of the World Health Organization (WHO) said on Tuesday as the death toll reached 1,017.
The Southern Peninsular Palm Oil Millers Association estimated Feb.1-10 production to increase by 48%, traders said.
“Better production (hopes) and slackening demand have kept prices under pressure," Paramalingam said.
Meanwhile, Malaysia's palm oil end-January inventories fell 12.7% to 1.76 million tonnes from the previous month, while production plunged 12.6% to 1.17 million tonnes month-on-month, MPOB said.
Dalian's most-active soyaoil contract fell 1.7%, while its palm oil contract traded 2.5% lower. Soyaoil prices on the Chicago Board of Trade slipped 0.3%. Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oil market.
Read more at https://www.brecorder.com/2020/02/12/570050/malaysian-palm-oil-falls-on-declining-exports/