KUALA LUMPUR: Malaysian palm oil futures fell on Thursday, giving up some of the last session’s sharp gains fuelled by Indonesia’s decision to curb exports, while higher-than-expected February inventories were expected to further weigh on the market.
The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange slid 94 ringgit, or 1.33%, to 6,980 ringgit ($1,668.26) a tonne by the midday break.
It had fallen 4.44% at the opening bell, after surging 10% in the previous session.
Indonesia’s palm oil price should not be dictated by the external market, its trade minister said, backing his decision to expand export curbs for the vegetable oil at a time of surging global prices from a supply crunch across the world.
The world’s top producer of palm oil will require companies to sell 30% of their planned exports of crude palm oil and olein at home, up from 20% currently, under a scheme known as Domestic Market Obligation (DMO).
Malaysia’s palm oil inventories at the end of February came in above market expectation, with stockpiles declining 2% to 1.52 million tonnes, versus a Reuters survey pegging an 11% fall.
Production dropped 9.26% to 1.14 million tonnes, while exports defied expectations to fall 5.32% to 1.1 million tonnes, according to Malaysian Palm Oil Board data released during the midday break.
Exports from the world’s second-largest producer during March 1-10 rose 15.1% from the same week in February, cargo surveyor Amspec Agri said.
Tight edible oil stockpiles and blocked shipments from the Black Sea area are expected to keep prices near record highs for the coming months, but sticker shock is expected to curb global consumption in the latter half of 2022, industry analysts said.
In related oils, Dalian’s most-active soyoil contract fell 1.3%, while its palm oil contract rose 1.5%. Soyoil prices on the Chicago Board of Trade were up 0.03%.
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