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Palm Oil Slumps After Recent Gains, Lower Stockpiles Limit Losses

COMMODITIES(B-Trams):

KUALA LUMPUR: After touching a close to three-week high the day before, Malaysian palm oil futures fell on Wednesday, but losses were limited by a forecast of decreasing stockpiles.

The benchmark palm oil contract for June conveyance on the Bursa Malaysia Subordinates Trade slid 56 ringgit, or 1.41%, to 3,910 ringgit ($889.85) a ton by the late morning break. In the two preceding sessions, the contract had increased by 5.45%.

Positive fundamentals and external markets are expect to support a recovery in palm prices, according to a note from Refinitiv Commodities Research.

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According to the statement, “previously, heavy rains and floods in Malaysia had resulted in weaker output, while Indonesia’s export restrictions prompted buyers to turn toward the supply of Malaysian palm oil.”

Malaysian stockpiles were expect to fall to 1.77 million tonnes at the end of March, the lowest level since July, according to a Reuters survey.

A survey released ahead of the Malaysian Palm Oil Board data due next week found that exports increased by 25% to 1.39 million tonnes and production increased by nearly 2% to 1.28 million tonnes.

In the meantime, palm’s trade currency, the ringgit, increased by 0.23 percent against the dollar, making the product more expensive for foreign currency holders. On the Chicago Board of Trade, soyoil prices were up 0.2 percent.

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Due to a public holiday, the Dalian exchange was close. Palm oil is impact by cost developments in relate oils as they seek an offer in the worldwide vegetable oils market stockpiles.

According to Reuters technical analyst Wang Tao, palm oil may fall to 3,853 ringgit per tonne after failing to break a resistance at 3,963 ringgit.