Palm falls 3% as China COVID surge stokes demand worries

March 15, 2022: Malaysian palm oil futures fell 3% on Tuesday, extending losses to a fourth session, as fresh COVID-19 curbs in key buyer China fuelled concerns about demand amid jitters over top producer Indonesia's export restrictions.

Investors were also closely watching for new policy changes in Indonesia after the country expanded a rule requiring companies to sell 30% of their planned exports domestically.

The benchmark palm oil contract FCPOc3 for May delivery on the Bursa Malaysia Derivatives Exchange slid 196 ringgit, or 3.08%, to 6,165 ringgit ($1,465.07) a tonne during early trade.

FUNDAMENTALS

* China reported a steep jump in daily COVID infections on Tuesday, with new cases more than doubling from a day earlier to a two-year high as a virus outbreak expanded rapidly in the country's northeast.

* Dalian's most-active soyoil contract DBYcv1 fell 1.3%, while its palm oil contract DCPcv1 was down 2.6%. Soyoil prices on the Chicago Board of Trade BOcv1 declined 1.1%.

* Oil prices slid to a two-week low on continued ceasefire talks between Russia and Ukraine, making palm a less attractive option for biodiesel feedstock.

* Palm oil may retest a support at 6,104 ringgit per tonne, with a good chance of breaking below this level and falling towards 5,744 ringgit, Reuters technical analyst Wang Tao said.

MARKET NEWS

* Asian stocks were in the red as surging COVID cases in China hit the confidence of investors who are already worried about the Ukraine war and the first U.S. interest rate rise in three years, which could come this week.

Reuters