Palm closes little changed, concerns over coronavirus weigh

SINGAPORE: Malaysian palm oil futures ended largely unchanged on Wednesday, with the market torn between concerns over world vegetable oil supplies and demand destruction amid rising coronavirus cases in key importers.

The benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange last traded down 2 ringgit, or 0.05%, to 4,040 ringgit ($981.77) a tonne.

"MPOA (Malaysian Palm Oil Association) production estimate due this week will set the tone for prices," said Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics. "Market is treading cautiously. There is enough sentiment to keep prices at these levels for a while."

Malaysia's palm oil stockpile in April likely inched lower despite production rising to a six-month high, hampered by robust exports and plummeting imports, a Reuters survey showed. The Malaysian Palm Oil Board (MPOB) will release its data on May 10.

Malaysia's central bank is expected to leave its key interest rate at a record low on Thursday to help support the economy's recovery as coronavirus cases rise, even as it has benefited from strong external demand, a Reuters poll showed.

Top importer India on Wednesday reported 382,315 new coronavirus cases, health ministry data showed.

Soyoil prices on the Chicago Board of Trade added 0.3% while the Dalian exchange was closed for a public holiday.

Labour shortage due to the COVID-19 pandemic is affecting production in Malaysia, the world's second-largest producer of palm oil. Analysts at UOB KayHian said in a report that there was still an estimated shortage of about 30% labour force.

The industry tried to recruit local people to harvest palm fruits but 60% resigned within a short period, the report https://bit.ly/2QTrig0 said, quoting MPOA Chief Executive Officer Nageeb Wahab.

Malaysia has approved the return of 32,000 foreign workers to the estates but progress is slow due to the sudden surge in COVID-19 cases, UOB KayHian wrote.

Palm oil is set to break a resistance at 4,098 ringgit per tonne and rise into a range of 4,130-4,169 ringgit, according to Wang Tao, a Reuters analyst for commodities technicals.