Palm drops over 5% but set for best weekly gain in five months

March 04, 2022: Malaysian palm oil futures fell more than 5% on Friday but were set for their biggest weekly gain since October on concerns over disrupted sunflower oil supply from the Black Sea region due to Russia's invasion of Ukraine.

The benchmark palm oil contract FCPOc3 for May delivery on the Bursa Malaysia Derivatives Exchange fell 353 ringgit, or 5.19%, to 6,455 ringgit ($1,543.15) a tonne in early trade, after declining 2.34% overnight.

For the week, it has gained 8.3% so far in what would be its second straight weekly rise.

FUNDAMENTALS

* The world's biggest palm oil buyers China and India are slowing down imports as prices rocket to historical high levels, even as the Russia-Ukraine crisis squeezed global edible oil supply, industry officials said in a UOB Kay Hian conference on Thursday.

* U.S. President Joe Biden's administration is studying whether waiving biofuel blending mandates could help offset a surge in prices for key food ingredients like corn and soy oil following Russia's invasion of Ukraine, two sources familiar with the matter said.

* Soyoil prices on the Chicago Board of Trade BOcv1 were down 1.5%. Dalian's most-active soyoil contract DBYcv1 fell 2%, while its palm oil contract DCPcv1 eased 2.4%.

* Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

MARKET NEWS

* Asian shares took a beating and oil prices jumped as a report of a nuclear power plant on fire amid continued fierce fighting between Ukraine and Russian troops further unnerved investors. MKTS/GLOB

* Oil prices rebounded as the disruption of Russian oil exports because of western sanctions outweighed the prospect of more Iranian supplies from a possible nuclear deal.

Reuters