Malaysian palm oil futures recouped most of their early losses on Monday, tracking gains in rival oils and as supply concerns fuelled by rising COVID-19 cases countered weak exports and lower Indian import duties on soyoil and sunflower oil.
The benchmark palm oil contract FCPOc3 for November delivery on the Bursa Malaysia Derivatives Exchange was down 4 ringgit, or 0.09%, at 4,261 ringgit ($1,007.81) a tonne by the midday break, after declining 2.4% earlier in the day.
Prices recovered on fresh fears about rising COVID-19 cases spreading from some estates to mills, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
“Delivery restrictions are adding more cautious play, with many worried about supplies especially in September,” he said.
Investors are now awaiting Aug. 1-20 production data from several industry groups.
“We expect an increase in production and decrease in exports, resulting in the addition of inventories at the end of August,” said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
Palm oil exports from the world’s second-largest producer during Aug. 1-20 fell 11.5% from the month before, cargo surveyor Intertek said.
India, the world’s biggest vegetable oil importer, on Friday cut base import taxes on crude and refined soyoil and sunflower oil to 7.5% from 15% until Sept. 30.
This puts soft oil imports at parity with those of palm oil and may cap a recovery in palm oil prices, traders and analysts said.
India may restore higher duty structure for palm and soft oils after Sept. 30, hence exporters will seek to ship to India as much as possible before the deadline, Bagani said.
Dalian’s most-active soyoil contract DBYcv1 gained 0.5%, while its palm oil contract DCPcv1 rose 1.2%. Soyoil prices on the Chicago Board of Trade BOcv1 were up 1.4%.
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 drop to 4,125 ringgit per tonne and stabilise around this level thereafter, Reuters technical analyst Wang Tao said. TECH/C
Source: Reuters (Reporting by Mei Mei Chu; Editing by Subhranshu Sahu)