Palm oil climbs for fifth day

February 23, 2022: Malaysian palm oil futures skyrocketed to a record high on Wednesday, hit by jitters over global supply amid rising exports, escalating Russia-Ukraine crisis and dry weather in South America.

The benchmark palm oil contract FCPOc3 for May delivery on the Bursa Malaysia Derivatives Exchange gained 77 ringgit, or 1.32%, to 5917 ringgit a tonne in early trade, extending gains for a fifth consecutive session.

The spot contract rose 1.04% to an all-time high of 6420 ringgit.

FUNDAMENTALS

The Malaysian Palm Oil Association on late Tuesday estimated production during Feb. 1-20 fell 1.79% from the month before, traders said.

Traders are assessing the impact of new sanctions by the West on Russia for ordering troops into separatist regions of eastern Ukraine and threatened to go further if Moscow launched an all-out invasion of its neighbour.

Oil prices took a breather after surging to seven-year highs as it became clear the first wave of U.S. and European sanctions would not disrupt the oil supply. 

Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.

The market is also assessing the impact of dry weather on South American soybean production areas. 

Soyoil prices on the Chicago Board of Trade BOcv1 were up 0.7%. Dalian's most-active soyoil contract DBYcv1 eased 0.5%, while its palm oil contract DCPcv1 rose 2.4%.

Palm oil FCPOc3 may rise to 5,986 ringgit per tonne, driven by a wave (5), Reuters technical analyst Wang Tao said. 

MARKET NEWS

Asian stocks steadied and demand for safe-havens waned a little as investors regarded Russian troop movements near Ukraine and initial Western sanctions as leaving room to avoid a war, while a rate hike lifted New Zealand's dollar. 

Reuters