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Palm oil falls over 2% on higher output outlook

June 28, 2022: Malaysian palm oil futures fell on Tuesday, giving up some gains from the previous session, as expectations of rising production and fears of recession weighed on prices.

The benchmark palm oil contract FCPOc3 for September delivery on the Bursa Malaysia Derivatives Exchange slid 133 ringgit, or 2.7%, to 4,789 ringgit a tonne during early trade.

Palm had jumped 5% in the previous session.

FUNDAMENTALS

The Southern Peninsula Palm Oil Millers' Association (SPPOMA) estimated June 1-25 production to rise 17.19% from the previous month, traders said on Monday.

Some palm oil millers in Malaysia, the world's second-largest producer, have temporarily halted production following a dramatic plunge in prices of edible oil, a senior official from the Malaysian Palm Oil Millers Association (POMA) told Reuters on Monday.

The recent hike in U.S. federal interest rates and the return of Indonesia's palm oil exports have sparked a steep price correction from record highs hit earlier in the year, Refinitiv Commodities Research said in a note late Monday.

Palm fundamentals are bearish and market sentiment is weak on expectations of recession and rising economic risks, but the downside is limited by a weak Malaysian Ringgit and huge palm price discounts to rival soybean oil, Refinitiv said.

Dalian's most-active soyoil contract DBYcv1 rose 1.8%, while its palm oil contract DCPcv1 was up 2.5%. Soyoil prices on the Chicago Board of Trade BOcv1 gained 0.8%.

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

MARKET NEWS

Asian shares edged down in early trade on Tuesday with investors taking their cue from a volatile Wall Street session overnight, while oil prices climbed following last week's rout.

Reuters

Posted on: 2022-06-28T09:24:44+05:00

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