Palm jumps 3% on stronger crude

March 07, 2022: Malaysian palm oil futures climbed 3% on Monday, recouping some of the previous session's sharp losses, as oil prices soared and surveys showed a slump in the end-February stockpile.

The benchmark palm oil contract FCPOc3 for May delivery on the Bursa Malaysia Derivatives Exchange was up 191 ringgit, or 3.04%, at 6,467 ringgit ($1,548.06) a tonne, after jumping 4.7% at the opening bell. Palm oil prices had dropped 7.8% on Friday.

FUNDAMENTALS

Malaysia's palm oil stockpile at the end-February likely plunged 11.4% from the month before to 1.38 million tonnes, its lowest in over 10 months, as production shrank for a fourth consecutive month while exports jumped, a Reuters survey showed on Friday.

Oil prices soared more than 6% on Monday, touching their highest since 2008 after the United States and European allies mull a Russian oil import ban while delays in the potential return of Iranian crude to global markets fuelled tight supply fears. 

Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.

The Russia-Ukraine war has halted Ukrainian sunflower oil shipments to the EU that usually represent around 200,000 tonnes per month, vegetable oil industry group FEDIOL said on Friday, adding that the EU was facing a shortfall. 

Dalian's most-active soyoil contract DBYcv1 fell 0.2%, while its palm oil contract DCPcv1 eased 1.2%. Soyoil prices on the Chicago Board of Trade BOcv1 were up 2%.

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

MARKET NEWS

Oil prices soared and shares sank in hectic trading as the risk of a U.S. and European ban on Russian products and delays in Iranian talks triggered what was shaping up as a major stagflationary shock for world markets. 

Reuters