Malaysian palm oil had ended the week on a positive note and the benchmark contract at Bursa Malaysia exchange was up by 1.05 percent week on week, settling at 4988 ringgit/tonne.
As understood from the charts, the benchmark contract will move towards 5200 in coming days as long as it closes above the 4775-4825 support region. Palm oil is the most consumed edible oil and has been a leading driver of this year’s stunning rally in global vegetable oil markets. Malaysian palm oil futures have rallied about 70% in the past year after hitting a record high this month.
There are reports of an increase in maintaining adequate stocks by the importing nations, especially by the leading consumer i.e. China, as the arriving shipments are facing quarantine measures against the COVID-19 threats. Besides, Malaysia’s production is set to drop to its lowest in the last 5 years as planters continue struggling with the worst-ever labor shortage in the second-biggest grower.
In a recent estimate made by an industry group representing 40% of palm plantations, the yields may remain lower till March 2022.
According to trade sources, the chances of Malaysia to relax cross-border restrictions on foreign workers are less in the short run, and may take a few more months from now. A number of factors are indicating a higher possibility for further gains in prices in coming days. Demand from the importing nations have picked up in recent months and most likely to remain strong as for now. The alternative edible oil prices have appreciated due to canola supply related constraints in Canada, and the economic recovery from Covid-19 continues globally.
These factors are expected to support the global demand for Malaysian palm oil in the near future. Additionally, the rise in fuel demand for transports as economies reopen in 2021, when compared with the previous year, has increased the global biofuel consumption prospects.
