Malaysian palm oil futures rose for the third consecutive day on Thursday, following the rise in crude oil and soybean oil prices as traders waited for April export data released later in the day.
The contract, however, was on course for a monthly drop of 13% after a historic rout in oil prices, and as coronavirus-driven lockdowns around the globe slammed demand.
On Thursday, the benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange gained 53 ringgit, or 2.6%, to 2,084 ringgit ($483.30) per tonne by the midday break. It was up 0.4% for the week.
However, the recovery in prices is likely to be short-lived unless Malaysian palm oil production is lower than market expectations, said Anilkumar Bagani, research head of Sunvin Group, a Mumbai-based vegetable oil broker.
Palm oil exports from Malaysia, the world’s second-largest palm producer, during its first month of a partial lockdown to contain the coronavirus tumbled 41.7% from a year earlier to 890,331 tonnes, its plantation industries and commodities minister said on Thursday.
FGV Holdings, the world’s largest crude palm oil producer, forecast a significant drop in 2020 output as coronavirus-driven restrictions disrupted work at its plantations and mills.
“The demand for palm oil is yet to improve on the whole but destinations are now buying a bit due to lucrative prices and a widened palm oil discount over soybean oil,” Bagani said.
Find out more: https://www.thestar.com.my/business/business-news/2020/04/30/palm-oil-rises-on-higher-crude-prices-but-set-for-13-monthly-drop