Palm rebounds as crude oil rallies

 March 09, 2022: Malaysian palm oil futures rebounded on Wednesday, as global commodity prices continued to rally amid the Russian invasion in Ukraine, with traders setting sights on outlooks from leading analysts at an industry conference.

The benchmark palm oil contract FCPOc3 for May delivery on the Bursa Malaysia Derivatives Exchange gained 3.21% to 6,622 ringgit ($1,583.83) per tonne in the early trade. The contract gained 1.62% in overnight trade.

Analysts in vegetable oils are expected to share their outlooks on palm oil later at a conference in Kuala Lumpur later on Wednesday.

FUNDAMENTALS

Malaysia expects a new batch of foreign workers to arrive in May and June for its palm plantations, the plantation industries minister said on Tuesday, a delay of months from an original plan to add more labour early this year.

Palm oil production in the world's top producers Indonesia and Malaysia is likely to rise about 3% each this year, but it would not be enough to meet global edible oil demand, leading analyst James Fry said ahead of the conference. 

Oil prices settled around 4% higher on Tuesday as the United States banned Russian oil imports and Britain said it will phase them out by year-end, decisions expected to further disrupt the global energy market where Russia is the second-largest exporter of crude.

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.

Dalian's most-active soyoil contract DBYv1 was little changed at 0220 GMT, while its palm oil contract DCPv1 gained 0.42%. Soyoil prices on the Chicago Board of Trade BOc2 were up 0.21%.

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

Palm oil remains neutral in a range of 6,414-6,679 ringgit per tonne, and an escape could suggest a direction, Reuters technical analyst Wang Tao said. 

MARKET NEWS

Crude oil prices jumped while Asian stocks regained their footing as investors assessed the impact of a worsening conflict in Ukraine and a new U.S. ban on Russian oil. 

Reuters