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Palm oil extends losses as Indonesia mulls raising export quota

July 04, 2022: Malaysian palm oil futures fell for a second day on Monday after top palm oil producer Indonesia said it is considering a larger export quota to reduce high domestic inventories, while weaker rival oils also weighed on prices.

The benchmark palm oil contract FCPOc3 for September delivery on the Bursa Malaysia Derivatives Exchange fell 2.1% to 4,611 ringgit ($1,046.05) per tonne during early trade.

The contract dropped 4% on Friday.

FUNDAMENTALS

* Indonesia proposed raising palm oil export quotas and is considering increasing mandatory levels of biodiesel in fuel mixes to prop prices for farmers at a time when domestic palm oil inventories are high, a senior minister said on Saturday.

* Meanwhile, Dalian's most-active soyoil contract DBYv1 fell 1.97%, while its palm oil contract DCPv1 slipped 2.24%.

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

* Oil prices fell in early Asian trade on Monday, paring gains from the previous session as fears of global recession weighed on the market even as supply remains tight amid lower OPEC output, unrest in Libya and sanctions on Russia. O/R

* Weaker crude futures make palm a less attractive option for biodiesel feedstock.

* Palm oil may stabilize around support at 4,588 ringgit per tonne, and test resistance at 4,742 ringgit thereafter, Reuters technical analyst Wang Tao said.

Reuters

Posted on: 2022-07-04T09:27:18+05:00

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