Malaysian palm oil futures hit six month low

Palm oil futures have hit a six month low on the Bursa Malaysia Derivatives Exchange, according to Dawn. Unexpectedly high levels of production and end stocks data from industry regulator the Malaysian Palm Oil Board (MPOB) are believed to be behind the drop.

MPOB showed end stocks in March increased by 6.5% from February to 1.55million tonnes. Output had surged by 16.3% to 1.46 million tonnes, marking the first monthly gain since September 2016, and the first month on month gain for over a year.

Output and inventories data both outpaced market expectations, which predicted stocks to rise by just 0.1% and production to increase by just 10.4%, according to a Reuters poll.

The rising output caused concern in the market, even though other data suggested there would be an increase in demand. The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange was down 2.5% a tonne at close of trade on 10 April, its weakest level since 11 October.

A futures trader from Kuala Lumpur told Dawn: “Palm’s decline is mainly on MPOB, which showed much higher end-stocks and high imports.”

Malaysia is the world’s second biggest producer of palm oil. Data from cargo surveyor Intertek Testing Services showed shipments from the country had increased by close to 21% in the first ten days of April.