Malaysian palm oil futures climbed more than 2% on Friday, buoyed by hopes of a revival in demand due to the easing of coronavirus-led curbs in some countries and a fall in inventories in top producer Indonesia, but the contract was set for a sharp weekly decline.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange gained 45 ringgit, or 2.3%, to 1,991 ringgit ($462.92) per tonne by the midday break.
Palm oil hit a 10-month low on Wednesday, while losing 4.6% this week, pressured by forecasts of April end-stocks in Malaysia rising 10% from March as lockdowns around the world sharply reduced demand.
Malaysian markets were closed on Thursday for a holiday.
Top importing nations, including India and China, are experiencing lower stockpiles due to the lockdown, and demand will surge once their restrictions are lifted, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari Sdn Bhd.
“The scenario of lower edible oil stockpiles both in China and India encouraged the covering we witnessed in the market today,” said Paramalingam Supramaniam.
Meanwhile, palm oil stockpile in Indonesia, the world’s largest palm producer, by the end of March fell to 3.42 million tonnes due to lower monthly output, down from 4.08 million tonnes a month earlier, the Indonesia Palm Oil Association (GAPKI) said on Friday.
Oil prices rose on Friday as more countries began easing lockdowns set in place to stop the coronavirus spreading, giving hope that demand for fuels will pick up after the economic devastation caused by the pandemic.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
Dalian’s most-active soyoil contract gained 1.05%, while its palm oil contract rose 1.61. Soyoil prices on the Chicago Board of Trade were up 0.53%.
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 2,014 ringgit per tonne, a break above could lead to a gain into the range of 2,043 to 2,072 ringgit, Reuters technical analyst Wang Tao said.
The Malaysian bourse will be closed for trading on Monday. ($1 = 4.3010 ringgit) –