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Asia Biofuels Update: Malaysian Palm Oil Retreats on Profit-Taking, Weak Fundamentals

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Malaysian palm oil futures slipped from two-week highs after traders took profits on Thursday, and as bearish exports and inventory estimates weighed on sentiment.

The Bursa Malaysia Derivatives' July and August crude palm oil contracts eased around 1.4% to 4,575 Malaysian ringgit ($1,148.03) per metric ton and 4,612 ringgit/mt, respectively.

Prices also tracked lower rival soybean oil and crude oil prices, after Israel and Lebanon agreed to implement a ceasefire, buoying hopes for a peace deal between the US and Iran.

Fundamentals appeared weak after a survey by Reuters showed an 8.8% to 15.5% month-over-month drop in May exports. This offset the impact of lower output, resulting in inventory buildup for a second straight month.

In top importer India, palm oil imports rose to 551,000 metric tons in May from 513,403 mt in April, according to dealers cited by the news agency, but volumes remained below average.

Indian refiners reportedly turned to rival soybean oil due to reduced economics for palm oil. As such, soybean oil purchases jumped 38% month-over-month to 497,000 mt in May, the highest in five months.

In Indonesia, the impact of the new single-gate export system, implemented on June 1, remains unknown, Jakarta Globe reported, citing Pudji Ismartini, a deputy at the Central Statistics Agency.

Ismartini reportedly said that the agency had not calculated the impact of the new policy on exports, which would have to wait for the availability of June data.

Indonesia's shipments of crude palm oil and its derivatives from January through April totaled 7.72 million tons, up 20.38% versus year-ago levels of 6.41 mmt.

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