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Palm oil drops as supply concerns ease on exemption from shutdown

Thu Mar 19 2020

 

Malaysian palm oil futures dropped on Thursday as harvesting resumed in world's second-largest palm producer after plantations were exempted from a shutdown imposed to prevent the coronavirus' spread.

 

The benchmark palm oil contract, for June delivery, on the Bursa Malaysia Derivatives Exchange slid 42 ringgit, or 1.88 per cent, to 2,197 ringgit ($500.34) in early trade.

 

Palm gained as much as 5.4 per cent in the previous session on fears that Malaysia's move to restrict movement until March 31 would halt harvesting and disrupt supply.

 

FUNDAMENTALS

 

Malaysia on Wednesday exempted palm plantations from the restricted movement order requiring most businesses to shut down, alleviating fears of a disruption in supply of the tropical oil to global markets.

 

The market was worried about global demand for the edible oil as the fast-spreading virus has now infected more than 212,000 people and caused 8,700 deaths in 164 nations, triggering emergency lockdowns and raising fears of a global recession.

 

Dalian's most-active soyoil contract dropped 1.71 per cent, while its palm oil contract fell 3.86 per cent. Soyoil prices on the Chicago Board of Trade were trading down 0.56 per cent.

 

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 retest a support at 2,184 ringgit per tonne, a break below which could cause a fall to 2,100 ringgit, Reuters technical analyst Wang Tao said.

 

Source: Reuters

Technical Research
Prices
Wednesday, March 18, 2020
ExchangeCommodityContractOpenHighLowClose
NCDEXMustard SeedApr203895398438633892
NCDEXSoy OilMar20763767.2758.2762.2
NCDEXSoyabeanMar203402347434003474
MCXCrude Palm Oil - MCXMar20602.2623.6602.1618.4
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