KUALA LUMPUR: Malaysian palm oil futures ended lower on Thursday and is expected to fall further after Indonesia announced that it would lift a ban on exports that had rattled the edible oil industry.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange closed down 60 ringgit, or 0.98%, to 6,074 ringgit ($1,379.67) a tonne.
Indonesia, the world’s biggest palm oil exporter, will allow exports to resume starting May 23, following improvements in the domestic cooking oil supply situation.
Palm oil firms as Indonesian export ban remains in place
The decision comes despite bulk cooking oil having not yet receded to the targeted 14,000 rupiah per litre price, as the government considers the welfare of 17 million workers in the palm oil industry, President Joko Widodo said in a video statement.
“Strong production numbers added with tank-busting stocks will again open the floodgates for aggressive export numbers out of Indonesia,” said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
Prices in Malaysia will again face headwinds, he added. The futures contract eased on Thursday as jitters from the sell-off in the U.S. equities market spilled over to put pressure on the palm market, Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics, said.
Steep falls in European and Asian stock markets followed Wall Street’s worst day since mid-2020 on Thursday, as stark warnings from some of the world’s biggest retailers underscored just how hard inflation is biting.
Traders are now awaiting Malaysia’s decision on its June crude palm oil export tax, Varqa said.
Soyoil prices on the Chicago Board of Trade extended overnight losses with a 1.2% decline. Dalian’s most-active soyoil contract fell 0.3%, while its palm oil contract rose 0.2%.
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