Palm rebounds on supply fears as Indonesian may widen export ban

Malaysian palm oil futures rebounded on Tuesday, after a sell-off in the previous session, as supply worries resurfaced after Indonesia said it could widen its palm oil export ban if it was unable to meet local demand.

The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange rose 174 ringgit, or 2.79%, to 6,403 ringgit ($1,472.97) a tonne by the midday break.

The contract fell 2% on Monday after rising nearly 7% earlier in the day.


Indonesia is prepared to widen a palm oil export ban, which currently only applies to refined palm olein, if local shortages of derivative products used in cooking oil occur, according to details of an official meeting with companies.

Indonesia will continue to hold meetings with cooking oil producers on Tuesday to discuss the export ban.

"Given Indonesia's reliance on palm oil exports, a prolonged ban could seriously damage Indonesia's economy. Thus, we doubt that the halt of exports will last for too long," brokerage TA Securities said in a note.




Meanwhile, exports of Malaysian palm oil products for April 1-25 fell 12.9% to 897,683 tonnes from the same period in March, cargo surveyor Societe Generale de Surveillance said.

Dalian's most-active soyoil contract fell 2%, while its palm oil contract lost 0.2%. Soyoil prices on the Chicago Board of Trade were up 1.1%.

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 bounce into a range of 6,326-6,392 ringgit a tonne, following its stabilisation around a support at 6,104 ringgit, Reuters technical analyst Wang Tao said.