(Jan 7): Palm oil rose as investors hoped for a rebound in Malaysian shipments and further production declines, although swelling stockpiles in the world’s second-largest grower capped gains.
There’s some optimism in the market after the jump in Malaysian exports in early January, alongside expectations for production to see a big drop this month, according to Paramalingam Supramaniam, a director at Selangor-based brokerage Pelindung Bestari Sdn.
Still, “we are not out of the woods yet, with inventories just a tad shy of three million tonnes and supplies sitting in tanks awaiting delivery,” he said. The ringgit is expected to strengthen by mid-year while Brazil may see a bumper soybean crop — both factors are bearish for palm oil’s demand outlook, he said.
Malaysian exports surged 31% from Jan 1 to 5 compared with the same period a month ago, according to cargo surveyor Intertek Testing Services. The nation’s inventories, meanwhile, likely climbed for a 10th straight month in December to reach a seven-year peak of 2.99 million tonnes, according to a Bloomberg survey.
“It’s overall difficult for palm oil to make a significant recovery at this juncture with demand still anaemic,” Paramalingam said.
See also: Indonesia to start road tests on B50 palm blend in December
Prices:
- Palm for March delivery on Bursa Malaysia Derivatives rises as much as 0.9% to RM4,024/tonne.
- Futures as of midday break: +0.4% to RM4,004/tonne; -1.1% year to date.
Uploaded by Arion Yeow
