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Palm oil rises on sluggish outlook

May 31, 2022: Palm oil futures in Malaysia clawed back on Tuesday after two days of losses, tracking crude oil and rival edible oil prices higher, while production in the world's second-largest producer is expected to remain sluggish.

The benchmark palm oil contract FCPOc3 for August delivery on the Bursa Malaysia Derivatives Exchange rose 1.83% to 6,346 ringgit ($1,450.85) per tonne during early trade.

FUNDAMENTALS

Oil prices rose on Tuesday after the European Union agreed to slash oil imports from Russia by the end of 2022, fuelling worries of a tighter market already strained for supply amid rising demand ahead of peak U.S. and European summer driving season. 

Crude oil affects palm oil prices as vegetable oil is often used as feedstock for biofuel.

The Malaysian Palm Oil Association is expecting about 52,000 migrant workers to arrive by the end of the year but warned that it would be too little, too late for output to rebound in the country. 

Indonesia has received its first requests for palm oil export permits following the lifting of a ban a week ago, a senior official said, signaling a calibrated resumption of shipments amid protracted delays. 

Dalian's most-active soyoil contract DBYc1 gained 0.67% while its palm oil contract DCPc1 rose 0.77%. Soyoil prices on the Chicago Board of Trade BOcv1 were up 0.71%.

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 6,423 ringgit per tonne, as it has stabilized around a support at 6,220 ringgit, Reuters technical analyst Wang Tao said. 

MARKET NEWS

Stocks wobbled and bonds fell in Asia, while the dollar rose on Tuesday after a hot inflation reading in Germany heightened nerves about the pace and scale of looming interest rate hikes. 

Reuters

Posted on: 2022-05-31T09:13:42+05:00

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