*Palm Oil Set For Weekly Loss on Sign of Easing Labor Crunch*
By Anuradha Raghu
(Bloomberg) — Palm oil headed for its first weekly loss in three weeks on dwindling exports from Malaysia and expectations that production will gather pace in the second-biggest grower.
Malaysia’s special taskforce committee on migrant labor has approved allocation of 32,000 workers for the plantation sector, according to Plantation Industries and Commodities Minister Zuraida Kamaruddin. The intake of foreign workers will ease the country’s chronic labor crunch and improve palm oil productivity, she said.
“Prices are reacting to news of easing labor shortage in the coming weeks,” said David Ng, senior trader at IcebergX Sdn. in Kuala Lumpur. Weaker exports from Malaysia are also putting pressure on the market, he said.
Cargo surveyor data showed Malaysian palm oil exports fell 15% to 18% during the first 20 days of April from a month earlier, as China slashed purchases and shipments to Europe and India eased.
The tropical oil has dropped 3.1% so far this week, after climbing more than 9% last week. Futures for July delivery rose as much as 1.2% on Friday, before dropping as much as 1.1% to 6,243 ringgit ($1,449) a ton, the lowest intraday level since April 14.
U.S. soybean oil eased after briefly surging to an all-time high above 80 cents a pound this week as Russia’s invasion of Ukraine curbed sunflower oil supplies and boosted demand for alternatives such as soybean oil and palm oil.
However, palm oil will remain supported by its wide discount to soybean oil, according to Abdul Hameed, director of sales at Manzoor Trading in Pakistan. Soybean oil’s premium over the tropical oil is now at the highest since August, Bloomberg data show.
Investors are also keeping a watch on top grower Indonesia, where stockpiles are reportedly rising as production is increasing by double digits, Hameed said.