Palm rises after worst week since 1986

March 21, 2022: Malaysian palm oil futures rose on Monday after posting their biggest weekly drop since 1986, as stronger crude oil and rival Chicago Board of Trade soyoil lifted the appeal of the tropical oil.

The benchmark palm oil contract FCPOc3 for June delivery on the Bursa Malaysia Derivatives Exchange gained 3.57% to 5,830 ringgit ($1,388.92) a tonne in early trade.

Palm fell 16% last week, snapping a three-week rally and erasing most of the war risk premium accrued after Russia invaded Ukraine late last month.

FUNDAMENTALS

* Indonesia has significantly raised its maximum palm oil export levy to $375 per tonne when the reference price is at least $1,500 a tonne, as part of efforts to control domestic cooking oil prices after previous measures failed to tackle the problem.

* The world's biggest exporter of edible oil last Thursday announced a surprise policy U-turn to remove export volume restrictions on palm oil products.

* Oil prices jumped $2 on Monday as Ukrainian forces dug in against heavy Russian attacks, while major oil producers reported they were struggling to produce their allotted quotas under a supply agreement.

* Stronger crude makes palm a more attractive option for biodiesel feedstock.

* Dalian's most-active soyoil contract DBYcv1 dropped 1.15%, while its palm oil contract DCPcv1 fell 1.74%. Soyoil prices on the Chicago Board of Trade BOcv1 were up 1.05%.

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

* Palm oil FCPOc3 may fall to 5,400 ringgit per tonne, as it has broken a support at 5,757 ringgit.

MARKET NEWS

* Asian share markets started the week in a sober mood on Monday as fighting in Ukraine raged on with no sign of stopping, leaving investors clutching at hopes for an eventual peace deal.

Reuters