Crude Palm Oil Gained Underpinned by Concerns Over Declining Production

Crude Palm Oil yesterday settled up by 1.08% at 1123.8 underpinned by concerns over declining production as a labour shortage hampers output. A labour shortage and coronavirus restrictions are clouding the outlook for palm oil production in Malaysia, dashing hopes of a large rise in output in the seasonal peak production months during the third quarter of the year.

Support was also seen on higher exports during July 1-15 and expectations of a sluggish rise in production. Exports of Malaysian palm oil products for July 1-15 rose 3.8% to 682,426 tonnes from June 1-15, cargo surveyor Societe Generale (PA:SOGN) de Surveillance said. Dry weather in the United States and Canada is curbing soybean and canola yields. Investors are also expecting palm oil production in July to be below potential despite the peak production season due to a labour shortage.

European Union palm oil imports in the 2021/22 season fell to 80,608 tonnes versus 214,613 tonnes in 2020/21, European Commission data showed. Plantations in Malaysia are entering the seasonal higher production months, but analysts are anticipating a small uptick in July output as a labour shortage continues to hamper harvesting. India’s palm oil and soyoil imports plunged by nearly a quarter in June from a month ago, a leading trade body said in a statement, as refiners postponed purchases anticipating a reduction in the import tax. In spot market, Crude palm oil gained by 13 Rupees to end at 1135 Rupees.

Technically market is under short covering as the market has witnessed a drop in open interest by -5.41% to settled at 3705 while prices up 12 rupees, now CPO is getting support at 1116.5 and below same could see a test of 1109.3 levels, and resistance is now likely to be seen at 1129.7, a move above could see prices testing 1135.7.

Trading Ideas:
# CPO trading range for the day is 1109.3-1135.7.
# Crude palm oil gained underpinned by concerns over declining production as a labour shortage hampers output.
# Export shipments from Malaysia during July 1-20 fell 7.9% to 863,586 tonnes compared with the same period in June
# The Southern (NYSE:SO) Peninsula Palm Oil Millers’ Association has estimated production during July 1-15 fell by 3.5% from the corresponding period in June
# In spot market, Crude palm oil gained by 13 Rupees to end at 1135 Rupees.

Investing.com

Tags: canola, EU, soybeans, palm oil