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Asia Biofuels Update: Palm Oil Slips Ahead of Key Monthly Data

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Malaysian palm oil futures slumped about 1.2% on Tuesday, as crude oil prices retreated and amid cautious trading ahead of the release of the Malaysian Palm Oil Board's monthly report.

The Bursa Malaysia Derivatives' July and August crude palm oil contracts dropped to more than one-week low at 4,483 Malaysian ringgit ($1,101.50) per metric ton and 4,518 ringgit/mt, respectively.

A Reuters survey showed that domestic stocks rose for a second straight month in May, due to lower exports. Cargo surveyors reportedly estimated an 8.8% to 15.5% month-over-month decline in shipments during the period.

A slight firming of the local currency further dampened export demand sentiment, as it makes cargoes more expensive. Malaysian ringgit gained 0.4% against the US dollar on Tuesday, partially reversing the more than 1% drop in the previous session.

Lower Chicago soybean oil prices also weighed on the palm oil market.

The MPOB data, due on June 10, are expected to drive palm oil price movement. Market observers cited by Bioenergy Times said immediate reaction will depend on how closely the industry figures match with estimates.

Tighter stock levels could trigger additional buying, while higher supply could facilitate profit-taking, traders reportedly said.

In Indonesia, the government reportedly issued technical regulations regarding its single-gate export system for palm oil, coal and ferroalloys.

Effective from June 1, the new export policy requires exporters to report relevant activities to a state-owned entity. For the palm oil sector, the scope reportedly includes crude palm oil, refined, bleached and deodorized palm oil, refined, bleached and deodorized palm olein, and palm oil residues.

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