Palm rises, investors assess Indonesia's domestic sales policy

May 23, 2022: Malaysian palm oil futures gained on Monday as higher rival oil prices supported the market, with traders assessing the impact of Indonesia's move to reinstate a domestic sales policy.

The benchmark palm oil contract FCPOc3 for August delivery on the Bursa Malaysia Derivatives Exchange gained 58 ringgit, or 0.95%, to 6,167 ringgit ($1,405.10) a tonne during early trade.

FUNDAMENTALS

Indonesia will reimpose a domestic sales requirement on palm oil, the government said last week after the world's biggest producer of the key edible oil reversed a ban on its exports. 

Indonesia's resumption of exports will not blunt Malaysia's competitiveness in exporting the edible oil, the Malaysian commodities minister said on Sunday, pointing to the rival's loss of sales in India.

Exports from Malaysia during May 1-20 rose between 28% and 32.6% from the same week in April, cargo surveyors said last week.

Dalian's most-active soyoil contract DBYcv1 rose 1.2%, while its palm oil contract DCPcv1 gained 1.8%. Soyoil prices on the Chicago Board of Trade BOcv1 were up 0.2%.

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 6,354 ringgit per tonne, as the bounce from the May 20 low of 5,925 ringgit looks incomplete, Reuters technical analyst Wang Tao said. 

MARKET NEWS

Asian stocks came under pressure as persistent worries about inflation and rising interest rates dogged the global economic outlook and fresh selling in technology stocks weighed on Chinese markets. 

Reuters