Palm oil extends gains on production outlook cut

June 02, 2022: Malaysian palm oil futures rose for a third straight session on Thursday, as output outlook dimmed after Indonesia stopped a group of migrant workers from entering Malaysian plantations facing a severe labor crunch.

The benchmark palm oil contract FCPOc3 for August delivery on the Bursa Malaysia Derivatives Exchange gained 0.85%, to 6,410 ringgit ($1,459.80) a tonne in early trade.

FUNDAMENTALS

Indonesia canceled a plan to send its citizens to work in palm oil plantations in neighboring Malaysia, which is facing a labor shortage, its envoy to Kuala Lumpur said on Tuesday. 

State agency the Malaysian Palm Oil Council (MPOC) lowered its production outlook on Wednesday for the world's second-largest producer and pegged prices to remain above 6,000 ringgit ($1,367.37) a tonne this year. 

India has slashed the base import prices of crude and refined palm oil while raising the price of crude soyoil, the government said in a statement late on Tuesday. 

Dalian's most-active soyoil contract DBYcv1 was up 0.14%, while its palm oil contract DCPcv1 rose 1.03%. Soyoil prices on the Chicago Board of Trade BOc2 were down 0.16%.

Palm oil looks neutral in a range of 6,220-6,423 ringgit per tonne, and an escape could suggest a direction, Reuters technical analyst Wang Tao said. 

MARKET NEWS

Asian share markets fell on widespread investor worries over high inflation and a threat of recession, while oil prices slumped following a report of reassurances from Saudi Arabia over production. 

Reuters