05.05.2020 (Reuters UK) - * Palm oil up 0.5% after previous session’s sharp fall
* Oil prices climb on expectations of demand recovery
* April end-stocks likely up 10% - Reuters poll (Adds midday prices, trader’s quote)
By Mei Mei Chu
KUALA LUMPUR, May 5 (Reuters) - Malaysian palm oil futures on Tuesday rose off nine-month lows hit in the previous session as crude prices jumped, although gains were limited by forecasts for higher April inventory.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange gained 10 ringgit, or 0.5%, to 1,993 ringgit ($462.95) per tonne by the midday break, after being volatile in early trade.
It fell 5% to the lowest since July 2019 on Monday.
Gains in crude oil and soybean oil prices helped ease the downward pressure on palm oil, a Kuala Lumpur-based trader said.
Palm futures have found a base around the 1,980 ringgit level, the trader added.
Oil prices climbed on Tuesday on expectations that fuel demand will begin to pick up as some U.S. states and nations in Europe and Asia start to ease coronavirus lockdown measures.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
Malaysia’s palm oil inventories for April likely rose 10% from March to their highest since December 2019, according to a Reuters poll. The poll also predicted that production rose 15% from the month before, while exports increased 4%.
European Union palm oil imports in the 2019/20 season that started last July fell 15% to 4.66 million tonnes by May 3, versus the year-earlier period.
Top palm producer Indonesia will likely face a “drier than usual” dry season in key agricultural regions this year, President Jokowi Widodo said on Tuesday, adding that measures must be put in place to ensure food security and price stability.
Malaysia criticised the World Health Organisation on Monday for advising adults to avoid palm oil in their diet during the COVID-19 outbreak and use alternatives such as olive oil.
Soyoil prices on the Chicago Board of Trade (CBOT) were up 0.34%. The Dalian was closed for trading.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Palm oil may drop more, into a zone of 1,921-1,954 ringgit per tonne, as suggested by its wave pattern and a projection analysis, Reuters technical analyst Wang Tao said.
($1 = 4.3050 ringgit)