KUALA LUMPUR: Malaysian palm oil prices slumps 3% on Tuesday, ending a three-day climb as Indonesia maintained its domestic sales rule and traders fretted about slow export demand.
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange fell 123 ringgit, or 3.13%, to 3,813 ringgit ($894.44) a tonne.
According to Marcello Cultrera, director at commodities consultancy Apricus 8 Pte Ltd, “Since yesterday (Monday) afternoon, we noticed the contract readjusting lower on the Indonesian announcement to hold the 1:6 export ratio versus domestic consumption.”
In order to meet rising demand before the Islamic religious holidays, Indonesia’s trade minister said on Monday that producers of cooking oil must increase their output by 50% for the domestic market over the next three months. However, this increase will not have an impact on the proportion of domestic to export sales.
The country’s palm oil fund (BPDPKS) predicted that in 2023, distribution subsidies for biodiesel based on palm oil would cost 30.22 trillion rupiah ($2.02 billion).
In Malaysia, exports from Malaysia in January slumped 27% from a month earlier due to weaker demand from key markets Europe, China, and India, cargo surveyor data showed.
Dalian’s Market most-active soyoil contract fell 0.5%, As its palm oil contract eased 2%. While Soyoil prices on the Chicago Board of Trade (CBOT) were down 0.6%.
Malaysia’s financial markets will be closed on Wednesday for a public holiday. Trading will resume on Thursday, Feb. 2.
