Palm oil futures made a steady recovery on Wednesday, supported by concerns over reduced production and increased exports from Indonesia. However, the potential for gains was tempered by an uncertain global demand outlook. The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange rose by 19 ringgit, or 0.48%, reaching 3,942 ringgit ($907.88) per metric ton. This marked the contract’s fifth increase in six sessions as of 0300 GMT.
Traders are increasingly worried about a potential decline in palm oil production in Indonesia due to adverse weather conditions and aging trees, which could affect the harvest in the world’s largest palm oil-producing nation. In June, Indonesia’s palm oil exports surged by 71.8% compared to May, totalling 3.385 million metric tons, although this figure represented a slight decrease of 1.88% from the same period last year, according to the Indonesia Palm Oil Association. Meanwhile, Malaysia’s palm oil product exports saw a decline of between 14.1% and 14.9% for the period of 1-25 August, as reported by cargo surveyor Intertek Testing Services and independent inspection company AmSpec Agri Malaysia.
Indonesia’s president-elect Prabowo Subianto addressed the European Union’s forthcoming deforestation regulation, suggesting that it could serve as an opportunity rather than a setback. He stated that Indonesia would increasingly divert its palm oil production towards biodiesel, with plans to implement a mandatory 50% palm oil-based biodiesel blend by early 2025. This initiative is expected to reduce fuel imports by $20 billion annually. Additionally, the Indonesian trade ministry is considering adjustments to its palm oil export tax to enhance competitiveness amid sluggish global demand, according to Bisnis.com.
In the broader market, Dalian’s most-active soyoil contract rose by 0.66%, while its palm oil contract saw a slight dip of 0.07%. Soyoil prices on the Chicago Board of Trade increased by 0.22%. Palm oil prices are closely linked to movements in related vegetable oils, as they vie for market share. According to Reuters technical analyst Wang Tao, palm oil prices may pull back to the range of 3,819-3,864 ringgit per ton, following a failure to break resistance at 3,966 ringgit and a downward trendline.
Dekel Agri-Vision PLC (LON:DKL) aspires to become a leading agro-industrial company in West Africa, one that creates value for shareholders whilst at all times placing the interests of the local communities and environment in which it operates in at the heart of its operations.
