Palm gains over 1% as Indonesia announces domestic sales policy

May 20, 2022: Malaysian palm oil futures reversed course to trade higher on Friday, after Indonesia's announcement to end its export ban was succeeded by Jakarta saying it would impose a domestic sales requirement for the vegetable oil.

The benchmark palm oil contract FCPOc3 for August delivery on the Bursa Malaysia Derivatives Exchange gained 110 ringgit, or 1.81%, to 6,182 ringgit ($1,405.96) a tonne during early trade. It had fallen 1.7% during the overnight trade.

For the week, it is set to drop 3% — the third consecutive weekly loss.

FUNDAMENTALS

* Indonesia announced that it will lift an export ban on palm oil from Monday after imposing the policy on April 28, allowing for supply from the world's biggest producer to re-enter the global market.

* But, the country's chief economics minister Airlangga Hartarto also said Indonesia will impose a domestic market sales requirement for palm oil to ensure the supply of cooking oil is secured at home.

* Malaysia, the world's second-largest producer, said it is still reviewing a temporary cut on palm oil export tax and will continue to monitor the current situation involving Indonesia's policy changes.

* Dalian's most-active soyoil contract DBYcv1 gained 0.8%, while its palm oil contract DCPcv1 rose 0.2%. Soyoil prices on the Chicago Board of Trade BOcv1 were up 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 test a resistance at 6,099 ringgit per tonne, with a good chance of breaking above it and rising towards the 6,213-6,354 ringgit range, Reuters technical analyst Wang Tao said. TECH/C

MARKET NEWS

* Asian shares jumped on Friday after China cut a key lending benchmark to support a slowing economy, but a gauge of global equities remained set for its longest weekly losing streak on record amid worries about sluggish growth.

Reuters

Posted on: 2022-05-20T09:29:20+05:00

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