Palm oil extends losses on prospects of Ukraine supplies resuming

May 26, 2022: Malaysian palm oil futures extended losses for a second session on Thursday, weighed down by weak soyoil demand in China and reports that Russia was ready to provide humanitarian corridors of stuck supplies out of Ukraine.

The benchmark palm oil contract FCPOc3 for August delivery on the Bursa Malaysia Derivatives Exchange slid 66 ringgit, or 1.03%, to 6,317 ringgit a tonne in early trade.

FUNDAMENTALS

Indonesia will determine palm oil producers' mandatory domestic sales volume based on their refining capacity and local demand for cooking oil, a trade ministry regulation document showed on Wednesday, as the government plans an industry audit.

Russia is ready to provide a humanitarian corridor for vessels carrying food to leave Ukraine, a major sunflower oil producer, in return for the lifting of some sanctions, the Interfax news agency cited Russian Deputy Foreign Minister Andrei Rudenko as saying. 

Plunging demand for soyoil in China is expected to cut consumption of the oilseed in the world's biggest user as lockdowns to prevent the spread of COVID have shuttered restaurants and canteens, according to traders and analysts.

Soyoil prices on the Chicago Board of Trade BOcv1 were down 0.6%. Dalian's most-active soyoil contract DBYcv1 fell 1.3%, while its palm oil contract DCPcv1 eased 0.1%.

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

Palm oil may retest a resistance at 6,560 ringgit per tonne, a break could lead to a gain to 6,713 ringgit, Reuters technical analyst Wang Tao said. TECH/C

MARKET NEWS

Asian share markets slipped after minutes from the Federal Reserve's early May meeting showed a majority backing half-percentage-point rate hikes in June and July, and as persistent concerns over global growth sapped confidence. 

Reuters