Palm falls 3% after Indonesia export curb-fuelled rally

March 10, 2022: Malaysian palm oil futures fell 3% on Thursday, paring some of the last session's sharp gains, as traders assessed the impact of a decision by top producer Indonesia to further tighten exports, ahead of February supply-demand data.

The benchmark palm oil contract FCPOc3 for May delivery on the Bursa Malaysia Derivatives Exchange slid 214 ringgit, or 3.03%, to 6,860 ringgit ($1,640.36) a tonne by 0248 GMT.

The contract had risen 10% in the previous session.

FUNDAMENTALS

* Indonesia 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).

* 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.

* The Malaysian Palm Oil Board is scheduled to release supply and demand data for February later in the day.

* Dalian's most-active soyoil contract DBYcv1 fell 2.3%, while its palm oil contract DCPcv1 slipped 0.4%. Soyoil prices on the Chicago Board of Trade BOcv1 were down 0.2%.

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

* Palm oil may retest a resistance at 7,302 ringgit per tonne, a break above which could lead to a gain to 7,504 ringgit, Reuters technical analyst Wang Tao said.

MARKET NEWS

* Asian shares surged, tracking Wall Street's gains as planned diplomatic talks between Russia and Ukraine buoyed sentiment, although analysts warned the rally could be susceptible to a sharp reversal as risks remain.

Reuters