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By Mei Mei Chu
KUALA LUMPUR, Feb 28 (Reuters) – Malaysian palm oil futures tracked rival edible oils lower on Tuesday, but were set for a 9.7% monthly gain as rains fuelled concerns about output in the world’s second biggest producer.
The benchmark palm oil contract FCPOc3 for May delivery on the Bursa Malaysia Derivatives Exchange slid 41 ringgit, or 0.97%, to 4,184 ringgit ($933.30) a tonne by the midday break.
Further weakness in the market was triggered by rumours of Indonesia lowering its B35 biodiesel mandate to ensure domestic supply of palm olein until Ramadan, even though the government has denied any such possibility, said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
Indonesia will boost efforts to ensure a scheme to replant palm oil to lift flagging yields meet a target of 180,000 hectares this year, an official said on Monday, as growers of the edible oil face increased scrutiny over sustainability.
The world’s largest producer plans to set its crude palm oil reference price at $889.77 per tonne for the March 1-15 period, an official at the Economic Coordinating Ministry said, up slightly from $880.03 per tonne set for Feb. 16-28.
Refinitiv Agriculture Research said in a note on Monday that heavy rainfalls were expected across parts of the western regions of Peninsular Malaysia and Sumatra in early March, raising risks of flood hampering production.
Dalian’s most-active soyoil contract DBYcv1 fell 0.5%, while its palm oil contract DCPcv1 lost 0.5%. Soyoil prices on the Chicago Board of Trade BOcv1 were down 0.3%.
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 of 4,155 ringgit per tonne, a break below which could open the way towards 4,039-4,083 ringgit range, Reuters technical analyst Wang Tao said. TECH/C
($1 = 4.4830 ringgit)
(Reporting by Mei Mei Chu; Editing by Subhranshu Sahu)
((Meifong.chu@thomsonreuters.com))
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