Palm falls on higher production

March 29, 2022: Malaysian palm oil futures fell on Tuesday, weighed down by expectations of higher production amid slowing exports and weakening crude prices.

The benchmark palm oil contract FCPOc3 for June delivery on the Bursa Malaysia Derivatives Exchange slid 60 ringgit, or 1%, to 5,918 ringgit ($1,402.87) a tonne in early trade.

It fell 1.76% overnight.

FUNDAMENTALS

A millers' association on Monday estimated March 1-25 production rose 15.3% from the month before, traders said.

Exports during the same period fell 5% month-on-month, cargo surveyors said last week.

The Ukraine-Russia crisis has sent commodity prices higher, but a recent correction in the crude palm oil market will likely attract some price-sensitive buyers, Refinitiv Agriculture Research said in a note late on Monday.

Gains in palm oil prices are also limited by the EU commission's move to safeguard food security at the expense of the biofuel mandate, Refinitiv said.

Dalian's most-active soyoil contract DBYcv1 fell 1.2%, while its palm oil contract DCPcv1 eased 1%. Soyoil prices on the Chicago Board of Trade BOcv1 were up 0.08%.

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

MARKET NEWS

Japanese shares led gains in Asian stocks as the Bank of Japan defended its ultra-easy stance, while oil slid on fears of lower demand from China as Shanghai applied a "zero-COVID" strategy by locking down despite a relatively modest caseload. MKTS/GLOB

U.S. crude futures fell, extending losses from the previous day as Ukraine and Russia headed for peace talks and on fears of a drop in fuel demand in China after the financial hub of Shanghai shut down to curb a surge in COVID-19 cases. 

Reuters