Malaysian palm oil futures fell on Tuesday, dragged lower by top buyer India’s import restrictions on the refined product and as the market maintained a cautious stance ahead of official data.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange slid RM22, or 1.09%, to RM1,998 per tonne during 0300 GMT.
Palm oil climbed 4% in the previous session on hopes of a revival in demand as countries begin to ease coronavirus-led restrictions put in place to curb the spread of the virus.
The Malaysian Palm Oil Board is scheduled to release its April supply and demand data later in the day.
India has suspended 39 licences to import refined palm oil after a surge in duty-free imports from neighbouring countries such as Nepal and Bangladesh which are not key producers of palm oil, government and trade sources told Reuters.
“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.
European Union palm oil imports in the 2019/20 season that started last July 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%, and keep going with an already ambitious 30% content, a senior official said on Friday, amid speculation that low crude prices could force a government re-think.
Oil futures rose on an unexpected commitment from Saudi Arabia to deepen production cuts in June to help drain the glut in the global market that has grown as the pandemic crushed fuel demand.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
Dalian’s most-active soyoil contract fell 0.98%, while its palm oil contract was down 1.08%. Soyoil prices on the Chicago Board of Trade were also trading down 0.91%.
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.