Palm oil ticks higher on lower production

July 19, 2022: Malaysian palm oil futures inched up on Tuesday in range-bound trading, as the market weighed lower demand due to more attractive pricing from rival Indonesia, against expectations of declining production.

The benchmark palm oil contract FCPOc3 for October delivery on the Bursa Malaysia Derivatives Exchange gained 4 ringgit, or 0.10%, to 3,949 ringgit a tonne during early trade.

FUNDAMENTALS

Top producer Indonesia has scrapped its export levy for all palm oil products until Aug. 31 and plans to set a crude palm oil reference price every two weeks so that its tax rate can move more in line with market prices. 

The market is supported by weaker-than-expected palm oil production, which a miller's association pegged to decline by 12% for the first half of July compared to the same period last month, Refinitiv Commodities Research said in a note on Monday.

Dalian's most-active soyoil contract DBYcv1 rose 1.3%, while its palm oil contract DCPcv1 gained 1.8%. Soyoil prices on the Chicago Board of Trade BOcv1 were down 0.5%.

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 rise to 4,246 ringgit per tonne, as it has broken a resistance at 3,958 ringgit, Reuters technical analyst Wang Tao said. 

MARKET NEWS

Asian shares slipped, following overnight declines on Wall Street, and the dollar hovered below last week's peak, but traders' main focus was approaching central bank meetings and the early stages of the U.S. earnings season. 

Reuters