Palm Oil Eases On Iran Attack, Lower Indian Imports
Palm oil had fallen three out of four sessions this week and had ticked up 0.2 per cent in the previous session.
Photo Credit :
Malaysian palm oil futures ended lower on Wednesday, weighed down by fears of lower imports from India and Iran's attack on US-led forces in Iraq, but fears of a shortfall in supply limited losses.
The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange closed down 4 ringgit, or 0.13%, at 3,038 ringgit ($740.98).
Palm oil had fallen three out of four sessions this week and had ticked up 0.2% in the previous session.
The market is balancing concerns on reduced purchases from India and the Middle East tensions, versus the concerns on the Q1 2020 supply tightening in Malaysia and Indonesia, said Marcello Cultrera, institutional sales manager at Phillip Futures in Kuala Lumpur.
December production and stockpiles in Malaysia, the world's second-largest producer of palm oil, likely fell 8.5% from November to its lowest in 27 months due to dry weather and lower fertiliser usage, a Reuters survey showed on Sunday.
Heavy downpours and flood concerns in Indonesia have also lowered 2019-20 production expectations in the world's top producer of palm oil, Refinitiv data showed.
While tighter supplies helped prices, markets were worried about a rise in freight charges in case a wider war in the Middle East disrupts shipment routes of palm oil, especially after Iran attacked American forces stationed in Iraq.
Fears of an inventory build-up rose after India, the world's largest palm oil buyer, informally asked refiners and traders to avoid buying Malaysian palm oil following Kuala Lumpur's criticism of its actions in Kashmir and its new citizenship law.
Meanwhile, domestic demand is forecast to increase with Malaysia expected to absorb 500,000 tonnes more crude palm oil with the implementation of its B20 palm-based biodiesel programme this month.
Also supporting prices were gains in Dalian rival oils. Dalian's most-active soy oil contract rose 2.4%, while its palm oil contract also gained 1%. Soyoil prices on the Chicago Board of Trade slid 0.6%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.