KUALA LUMPUR: Malaysian palm oil futures slipped on Tuesday, weighed by cargo surveyor data showing a tumble in Jan. 1-10 exports, even as official numbers showed a sharp decline in December inventories.
The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange slid 7 ringgit, or 0.14%, to 5,022 ringgit ($1,198.00) a tonne by the midday break.
The market is supported by tight supplies amid heavy rains and flooding in Peninsular Malaysia, with a millers’ association pegging a 45.75% monthly drop in Jan. 1-5 production, Refinitiv Agriculture Research said in a note on Monday.
However, the upside is capped by weaker demand amid persistently high palm prices, Refinitiv added.
Meanwhile, analysts have said the impact of floods on production levels is minimal as palm trees can withstand temporary flooding.
End-December palm oil stockpile in the world’s second largest producer fell more than expected, down 12.9% from the month before, as production nosedived while domestic consumption jumped, Malaysian Palm Oil Board data showed on Monday, further tightening inventories for 2022.
Exports during Jan. 1-10 fell 40.6% to 325,601 tonnes from the same period in December, cargo surveyor Societe Generale de Surveillance said.
Going ahead, stockpiles are expected to remain tight in the seasonally slow output period and on healthy demand from China ahead of its New Year festivities, Shahira Rahim, an analyst with MIDF Research, said in a note.
Dalian’s most-active soyoil contract gained 0.6%, while its palm oil contract rose 0.5%. Soyoil prices on the Chicago Board of Trade were up 0.%% after declining 1.3% overnight.
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 test a support at 4,927 ringgit per tonne, a break below which could open the way towards 4,806 ringgit, Reuters technical analyst Wang Tao said.