-- Malaysian palm oil price movements diverged from crude oil, as a slowdown in exports weighed on futures, despite a rally in the energy market.
The Bursa Malaysia Derivatives' May and June crude palm oil contracts slipped around 0.2% to two-week lows of 4,489 Malaysian ringgit ($1,129.45) per metric ton and 4,532 ringgit/mt, respectively.
Crude oil prices rallied as the US military prepared to begin a blockade of all Iranian ports in the Strait of Hormuz, after the US and Iran failed to reach an agreement during weekend peace talks.
Escalating geopolitical conflict has lifted palm oil prices since late February.
However, industry profits may not totally reflect surging prices as shipping disruptions cut export margins, Malaysian Palm Oil Board director-general Ahmad Parveez told The Star.
Malaysia's key markets in the Middle East may also turn to nearby suppliers as shipping detours around Africa prolong transit times by almost two weeks, Parveez reportedly said.
In the first 10 days of April, Malaysian shipments reportedly dropped between 30.7% and 38.9% versus month-ago levels, according to cargo surveyors. If lower exports are sustained for the whole of April, the trend could reverse a 40.7% month-over-month jump in March shipments.
Anilkumar Bagani of Sunvin Group, as cited by Reuters, said further robust export performance is necessary to facilitate a drop in domestic inventories this month.
CIMB Securities, as cited by New Straits Times, said Malaysian stocks could further fall to 2.2 mmt in April from 2.3 mmt in March, if higher demand is sustained and production declines.
The country's export demand could get a boost from Indonesia's move to raise biodiesel blending to 50% from 40% beginning July 1.
Production, on the other hand, could ease due to fertilizer supply disruptions and El Nino-related risks.