Malaysian palm oil futures on Tuesday hovered near a 10-month low hit last week as top buyer India’s import restrictions on the refined product dragged prices, though a weaker ringgit capped losses.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange was down RM6, or 0.3%, at RM2,014 per tonne during the midday break. The contract traded near its lowest since last July.
India, the world’s largest edible oil buyer, has suspended 39 licences to import 452,303 tonnes of refined palm oil after a surge in duty-free purchases from neighbours such as Nepal and Bangladesh which are not key producers.
“The suspension is adding some pressure on the contract as it affects firms importing from Nepal and Bangladesh only,” a Kuala Lumpur-based trader said.
Palm oil climbed 4% in the previous session on hopes of a revival in demand as countries begin to ease coronavirus-led restrictions.
The ringgit, palm’s currency of trade, was down 0.14% against the US dollar, making the edible oil cheaper for holders of foreign currency.
Palm oil also tracked weakness in soy oil futures on the Chicago Board of Trade and the Dalian, but a weaker ringgit supported prices, said Anilkumar Bagani, research head of Sunvin Group, a Mumbai-based vegetable oil broker.
Malaysia’s April palm oil inventories jumped 18.3% to 2.05 million tonnes from the previous month, according to the Malaysian Palm Oil Board (MPOB) data released during the midday break.
“The overall trend remains down and now market is expected to trade lower,” Bagani said.
European Union palm oil imports in the 2019/20 season stood at 4.78 million tonnes by May 10, down 15% from a year-ago period, official EU data showed on Monday.
Malaysia palm oil exports in May 1-10 rose between 7.8% and 11.9% from the previous month, according to cargo surveyors.
Indonesia is likely to delay plans to raise bio-content in palm oil-based biodiesel to 40%.
Dalian’s most-active soyoil contract fell 1.19%, while its palm oil contract was down 1.9%. Soyoil prices on the Chicago Board of Trade were also trading down 1.25%.
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 rise into a range of RM2,043-2,072 per tonne, as it has broken a resistance at RM2,014, Reuters technical analyst Wang Tao said.