Palm Falls By 3%: Indonesia Maintains The Domestic Selling Rule
For the first time in four sessions, Malaysian palm oil futures declined to below MYR 3,840 a tonne. It closed down on the six-week low of MYR 3,753 set on January 25th amid prospects of increased supply, weaker demand, and continued growth for the ringgit.
In order to meet the increased demand for cooking oil during Islamic holidays, Indonesia’s trade minister ordered producers to increase domestic production by 50% until April. He also maintained the mandatory export-to-domestic consumption ratio at 1:6, which increased expectations for supply and ending stocks.
Meanwhile, cargo surveyors reported that due to reduced demand from Europe, India, and China, Malaysian exports fell from 28% to 35% from January 1 to 25 compared to the previous month. On the other side, growers in Malaysia’s Johor state in the south worry that after many days of heavy rains, stagnant flood waters may harm their palm oil yields.
Tuesday saw a 3% decline in Malaysian palm oil futures, capping a three-day rise as traders fretted over weak export demand and Indonesia maintained its domestic sales restriction. On the Bursa Malaysia Derivatives Exchange, April delivery’s benchmark palm oil contract for April delivery dropped 123 ringgit, or 3.13%, to 3,813 ringgit ($894.44) a tonne.
This shows that supply is improving, as evidenced by greater year-over-year ending stocks. Dalian’s most active palm oil contract declined 2%, and the soy oil contract fell 0.5%. On the Chicago Board of Trade, soy oil prices decreased by 0.6%.
Palm Declines From A Close To Three-Week High
Due to a public holiday, Malaysia’s financial markets will be closed on Wednesday. Trading will start up again on February 2nd. Following a session in which they reached their highest level in over three weeks, Malaysian palm oil futures fell on Tuesday as traders worried about weak export demand ahead of cargo surveyor data. After climbing for three days, the benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange fell 39 ringgit (0.99%) to 3,897 ringgit ($917.59) a tonne in early trade.
Dalian’s most active palm oil contract slipped 1.3%, while the soy oil contract dipped 0.5%. Soybean oil prices increased 0.1% on the Chicago Board of Trade. As they contend for a piece of the global vegetable oil market, palm oil is impacted by changes in the prices of related oils. Palm oil may test a support at 3,888 ringgit per tonne; a breach below that level might go to 3,796 ringgit.