Palm oil spikes 5% as Malaysian plantations shut down for two weeks

KUALA LUMPUR: Malaysian palm oil futures jumped on Wednesday on supply concerns after plantations were forced to shut their operations for two weeks to comply with government orders as the country tries to curb the spread of the coronavirus.

The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange climbed 122 ringgit, or 5.42 per cent, to 2,372 ringgit ($544.91) by 0242 GMT.

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Palm oil plantations in Malaysia will have to stop operations for the next two weeks to comply with government orders to shut non-essential businesses to contain the coronavirus outbreak, the Malaysian Palm Oil Association said on Wednesday.

The industry could face a potential loss in crude palm oil supply of around 708,500 tonnes and this could cut stockpile estimates for end-March to around 1 million tonnes from 1.68 million tonnes previously, Ivy Ng, regional head of plantations research at CIMB Investment Bank said in a note to clients.

Dalian's most-active soyoil contract traded 1.11 per cent higher, while its palm oil contract gained 3.87 per cent. Soyoil prices on the Chicago Board of Trade were also trading up 2.34 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.